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Last update: May 2021

3 mins to read - 2017/07/14

Why You Should Track Retention Rate of App Users

In today’s marketing landscape, messaging campaigns can be tracked and reported on. This makes it much easier to understand how they affect sales, awareness, and usage for mobile apps. Tracking retention rate is the main method used to verify whether app users are positively engaged. Retention rate, according to multiple industry exports, is the ratio of the number of retained customers to the number at risk.

For years, the most important mobile metric had been acquisition. Marketers would devote their whole budget to UA, turning a blind eye to customer churn. Nowadays, more apps are shifting towards retention. The focus is now on in-app behavior within in-app messaging, and promoting engagement and win-back of lapsed users.

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track your user retention rate with OpenBack

How to track your retention rate?

There are many formulas available for calculating retention rate, but the standard one used by marketers for customer retention is:

Retention Rate = ((CE-CN)/CS) X 100

CE = number of customers at end of period

CN = number of new customers acquired during period

CS = number of customers at start of period

While this formula may seem intimidating, it’s actually quite easy to use. Here’s an example: Let’s say you begin the month (or whatever time period) with 1,000 mobile installs. You gain 100 new users, but lose 40. At the end of the period you have 1,060 mobile installs.

Using the formula provided above:

1060-100 = 960; 960/1000 = 0.96; x 100 = 96. The retention rate for the period was 96%.

Why should you care?

Many apps do not bother with tracking their retention rates. However, the numbers are too scary to leave this to pure chance. Studies find that on average 71% of all app users churn within 90 days. A good point to remember is the retention rates can vary depending on different categories of apps. Plus, many products and services are available to help improve retention, although there’s still more to be done.

Calculating customer retention is a good place to start. The goal is to maintain higher customer retention since it’s much cheaper to retain existing users than to attract new ones. Retained customers are more likely to continue usage, pay for additional services, share with friends and try any additional apps that might be available. Using data that most marketers are already familiar with also means retention can be a good benchmark for marketing efforts. To app owners, maintaining strong retention rates mean that you’re doing a good job at keeping users happy and positively engaged over a period of time. Leading to more app usage and revenues.

Mobile marketers are searching for next generation capabilities to increase engagement using location-based marketing, contextual trigger points, machine learning and even artificial intelligence to figure out the best way to retain users.

Dynamic notifications lead to higher retention rates

It’s better late than never to start caring about user retention how it affects your mobile marketing campaigns. OpenBack’s mobile engagement platform offers a full range of metrics for A/B Testing, so you can track your retention rates and see what strategies work and what don’t.

Get in touch with one of our experts to learn more!

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