How To Grow Your App With Retention Rate

Every app developer wants their product to be successful. But what exactly measures success in the subscription-based business? In our previous blog post, we already talked about five crucial metrics to grow fast in 2022. But today we would like to focus only on one metric - retention rate.

Before we get started, let's imagine that after months of hard work, you finally launched your app and it reached 100,000 downloads. What an impressive number, right? But don't be misled by it! The truth is, you can have an ample number of downloads but how many people are actually active on your app? That's a one-million-dollar question and the retention rate is an answer.

Want to know more? Then keep reading!

So, what exactly is the retention rate, or as we call it in Apphud, subscribers retention? One thing we should reveal from the beginning is that its definition greatly varies depending on the industry. But in the mobile business, retention is a metric that tells you how many people are actively engaged with your app over a given period of time.

In addition to that, retention can explain why exactly people are engaged and why they are leaving your app. For instance, if you've just installed updates on your app, then retention would uncover whether these changes were beneficial for your engagement or not.

With retention, you'll know what you need to improve and how to make smart decisions that could bring more revenue. It's an accurate indicator of your app's growth. As it's capable of explaining user behavior and predicting trends, some experts say that retention is even more informative than downloads or acquisitions.

We believe that retention data can be beneficial for all teams in your company, improving the customer journey of your subscription app. And if you have a great product, happy customers can refer more people to it, which in turn will increase the revenue.

If you want to calculate the retention rate, cohort analysis is a great tool for doing that. It enables you to acquire a deep understanding of how users are renewing subscriptions and how subscribers and revenue retains. That's how you can understand why people like your subscription app.

To calculate the subscriber retention rate, you should use this formula:

Subscriber retention rate = [(# Subscribers at End of Period — # Subscribers Acquired During Period) / # Subscribers at Start of Period] x 100

When you start calculating retention, keep in mind that the industry and type of the app dictate what is the perfect average. But if you still want to know the ideal number you should strive for, then experts mostly agree that it's 25% in the past 90 days.

If you're wondering how you can improve your retention rate, here are some recommendations from us.

• First, a personalized approach always pays off. You should study what your customers are expecting from your product to meet, or, even exceed their expectations. Your goal should be to make them feel valued, establish rapport, and provide a truly unique experience. So, improve your communication with users and try to get to know them better. 

Also, you can use push notifications with personalized messages. There is no need to send them out too often, but from time to time it can be absolutely acceptable.

• Second, adjust your strategy to win back returning customers. For instance, you may offer them discounts or a cost-effective subscription. The reason why it's important to convince this target group to stay is that retaining new users is extremely challenging. That's why, if you have a person who has already come back to your app, it's an indicator that they are actually interested. So, put all of yourself into making them stay.
• Third, constantly upgrade and optimize your app. Don't do it just to show that you’re doing something, but do it smartly. For example, if you want to try out new features, implement A/B testing. That way, you won't lose users but will have a chance to understand whether upgrades work for your audience or not.

And most importantly, remember that the first impression is the best impression that you should make. Your onboarding process must be smooth, convincing, and positive. Keep in mind that it's the moment when users decide whether they actually want to stay. And if you fail, the chance that they'll use your app drops down to zero.

In Apphud, we use cohort analysis to examine the users' behavior, monitoring both Subcribers Retention Rate and Net Revenue Retention. We believe that analyzing both of them gives a more comprehensive picture of how subscribers and revenue retain.

With Retention Rate we can see how many subscribers renew their subscriptions. Please note that we don't count subscribers who made a full refund of their App Store/Google Play subscriptions in the Renewal 0 group. The picture below illustrates the visual chart of subscriber retention.

Subscribers retention, Apphud

While the Net Revenue Retention gives us the data about in-apps revenue retention. Basically, we can see how much money we have in every cohort after each renewal. This information is important to track how in-app subscription falls. You can also see what the net revenue retention looks like in Apphud from the picture below.

Net Revenue Retention, Apphud

To sum up, retention rate can elevate your app and allow you to better understand your users' intentions. And if you know what your target audience wants, that's already a win.

If you're planning to calculate the retention but don't know where to start, let us help you out! In Apphud, together with retention, we track more than 20 other metrics! All the important data will be just within a click of a button. And, it's FREE! Sign up here and try it out!

Nataly

Head of Marketing at Apphud

7+ years in product marketing. Nataly is responsible for marketing strategy development and execution. Committed adherent of the agile methodology.