Identical apps launch all the time, sometimes the very same week. While user rates always fluctuate with time, it’s the app with an effective retention strategy in place that’s going to win out in the long run, even over seemingly identical competitors who get a faster start out of the gate.
At a recent event hosted by The Mobile Growth Agency, Amplitude’s Director of Enterprise Sales Marcus Ratzlaff shared a three-step roadmap to supercharging your retention no matter what your business does.
To illustrate the importance of retention even versus something as critical as user acquisition, Ratzlaff using two music streaming apps launched in March of 2014 as an example. He showed that although App A was acquiring 5 million new users per month to App B’s 2.5 million, App A’s 80 percent retention rate versus App B’s 95 percent retention ensures that after three years, App B would have nearly double the number of App A’s users at nearly 45 million.
So why did this happen? What did App B do to ensure such an effective retention strategy and how can you do it too?
First, define your critical event, which is any meaningful action a user takes which reflects the value your app is delivering to them.
“If you’re a music streaming app, they define their critical event as a user playing a song. So instead of measuring user retention base on when they open the app or start a session, they were defining it when a user comes in, plays a song and gets value out of their app,” Ratzlaff said.
The next step is to define your app usage frequency, or how often you expect users to come back and perform the product’s key event. If you are an app whose typical user performs that critical event daily versus weekly or monthly, the retention metrics should reflect that.
But how do you define your product’s usage frequency if you’re unsure? You can do it manually by determining how long it takes for 80 percent of your users to repeat your critical event. For the music app in Ratzlaff’s example, they determined 80 percent of their users repeated the pre-defined “play song” critical event the first day.
Lastly but perhaps most importantly is to define your retention lifecycle. This will bring in new users, turn existing users into power users, and most powerfully, re-engage churned users to turn them into resurrected ones.
New user retention is obviously critical and first impressions are important.
“There’s nothing like downloading an app that crashes when you do the first critical event. New user retention is all about understanding what features are actually causing users to come back within that first day or week.”
Ratzlaff said the music app found that new users who created a playlist actually retained at a much higher rate on day 7 than users who didn’t.
“They aren’t segmenting users based on simple metrics like first install or segmenting them based on demographic information like male vs. female or whether they came from a Facebook or Twitter campaign. They’re actually digging into the user behavior that’s impacting this metric,” he said.
Your current active users make up the meaty center of your userbase, and understanding what makes them tick and their behavior in-app can help get them more engaged. When the music app found users who joined community aspects of the app retained much better than those who didn’t, the product team doubled down on social features, making them easier to use and more accessible, turning a lot of current users into power users in the process.
Resurrected user retention is when a churned user returns to the app. This can happen for a variety of reasons, but Ratzlaff said when the music streaming app ran a winback campaign through AppBoy, it lead to a higher rate of retention among those resurrected users who returned to the app via the winback campaign than users resurrected from elsewhere, even at higher rates than their baseline new users.
“Running a winback campaign generated a significant lift to help turn churned users into resurrected users,” Ratzlaff said.
So what are the key takeaways and how can you apply these ideas to your business?
• Define your critical event. Determine where your users are getting value from your product and measure your retention appropriately. Ratzlaff said that the best companies around today are not measuring based on app opens and sessions.
• Define your app’s usage frequency. How often do your users come back and perform that critical action previously defined? Is it daily? Weekly? Monthly? Your retention metrics should align with your usage frequency for maximum accuracy.
• Figure out your retention lifecycle. You can gain a big lift focusing not just on how to obtain new users, but how to engage existing ones and resurrect churned users.
• Digging into user behavior versus segmenting users into demographic groups is a much more accurate pulse of retention metrics.