Market benchmarking shows that from 2020 to 2022, app retention decreased by 11-32% in such categories as shopping, entertainment, food and beverage, finance, and others. The main reasons are a high number of downloads but low engagement and high competition in the niche. Attracting a new customer can cost five times more than keeping an existing one. That is why mobile app marketers are shifting their focus from growing app downloads to user retention.

In this article, we talk about the functionality and channels that help retain your app users. We will also show how it works in practice using the examples of Ukraine's largest marketplace Prom.ua, the educational and entertainment project for children IntellectoKids, and the food delivery service.

Retention Rate Definition

Customer retention rate measures the number of users who stay with a company over a period of time. You can analyze it by certain periods: month, quarter, year. To determine the retention rate:

1. Choose a specific time period (30 days, quarter, year).
2. Find out the number of customers at the beginning and end of the period.
3. Determine the number of new customers acquired during the period.
4. Calculate the retention rate using the formula:

 

At the same time, there is no universal retention benchmark. It depends on the market, category, specifics of the business, and to some extent on the operating system of the user's device. However,  you can focus on statistical reports in your industry.

Statista research as of Q3 2022 shows that the average retention rate on the first day is 25.6%. However, on the 30th day, this percentage drops to 4.3%.

This number varies depending on the category. For example, news apps have an average 30-day retention rate of 11.3%. In all other categories during this time period, the rate is almost twice as low: for example, Shopping – 5%, Food & drink – 3.7%.

Regardless of the business model, the indicator decreases with each subsequent period. In order for the business not to lose customers but to grow steadily, you should improve retention. To do this, you need to develop a retention strategy. Let's take a closer look at the necessary tools and channels.

Mobile App Users Retention Tools

The task of the business is to develop a user’s habit of getting back to the app frequently. You can achieve it through systematic and relevant interaction that builds loyalty, value understanding, and trusting relationships with each user. Let's consider the approaches that will help in this way.

Automation

Today, it is difficult to imagine a successful business without marketing process automation. There are many different tools to work with customer data automatically. They include CRM, DWH, DMP, analytical platforms, and marketing automation systems. However, they cannot fully provide a single place for:

• Collection of client data in various formats (structured, unstructured) and from all communication channels: mobile applications, loyalty programs, offline, and other databases such as BigQuery, PostgreSQL, and Firebase.
• Processing and summarization of client data into a single client profile – with the removal of duplicates and enrichment of the profile with real-time information.
• Flexible management of customer data within one platform – the use of data for segmentation, personalization, analytics, and organization of newsletters, which can be performed by the marketer independently, without the involvement of technical specialists.

A customer data platform (CDP) is a universal solution that solves these tasks. The customer data platform fully supports the collection, processing, and use of marketing data. Behavioral data of mobile application users is automatically transferred through the SDK to the platform in real time. The functionality of segmentation, personalization, and newsletters, in turn, allows for responding to user actions promptly and correctly.

Advanced Segmentation

In-depth segmentation allows you to effectively deal with possible customer churn through pre-configured triggers. As soon as the user moves from one segment to another, the system will automatically run the necessary script.

Target segments can be formed based on a large number of conditions:

• User activity in the application, on the website, and in messages.
• Details of the client's purchases – average order value, purchase of a specific product/service X times, date of last order, city or store/institution where the purchase was made, etc.
• Events, such as order cancellation, or any event parameter, such as amount, or their combination.

Event segmentation allowed the Ukrainian food delivery service to implement a retention strategy and manage sales in each delivery city. For six months of using the functionality:

• CLTV grew by 12%;
• The number of orders increased by 40%;
• The average order value increased by 16%;
• After using reactivation triggers, 25% of customers started ordering again.

Another powerful tool for increasing CLTV is predictive segmentation.

AI algorithms predict the likelihood of customers buying or churning. This helps the business to understand in advance how to communicate with customers. So, the first group needs the right onboarding, personalized discounts, and profitable offers, which will help to get loyal customers and increase profits. The second group (potential churns) needs an automatic response through reactivation actions to retain as many customers as possible and extend their life cycle.

Personalization

According to a study by Evergage, 80% of mobile app users are more likely to use it again if it provides a personalized experience. What’s more, personalization can increase customer retention by 30%. That’s why shifting the focus from mass mailings to personalized newsletters has become a common strategy large brands follow. Below are some more facts about the impact of personalized communications on mobile app retention:

• Personalized push notifications can increase open rates by up to 50% (Localytics).
• Personalized in-app messages can increase click-through rates by up to 20% (Apptentive).
• Personalized recommendations generate about 20% of online store sales (Yespo).

AI helps marketers create such personalized content that will be interesting and relevant for users. It analyzes data about the client: their behavior in the application, newsletters, purchase history, and preferences. Based on this information, it generates personalized offers and relevant promo codes.

In this way, Ukraine's largest marketplace Prom.ua uses in-depth segmentation and product personalization for better user interaction and experience. The company primarily focuses on the mobile version and has created a real "Marketplace in your pocket".

The team abandoned mass mailings and implemented a retention strategy using Yespo CDP. Our platform offers a solution that reduces the cost of custom CDP software development and is immediately ready to use. AI analyzes a user's search, action, and purchase history and personalizes trigger emails based on the data.

Prom.ua updated 70 scenarios, including onboarding, transactional messages, abandoned actions, wish lists, reactivation, and others.

As a result, the marketplace increased:

• sales from personalized triggers by 10%, personal recommendations in them brought another +3%;
• retention rate of 4%.

Analytics

Based on detailed reports, you can adjust your retention strategy.

• The revenue from campaigns report gives a clear understanding of the contact’s activity by segments, the quality of the base, the profitability of the campaigns, the behavior in the message, etc.

• RFM analysis is the foundation for customer database segmentation. In the report, segments are formed taking into account purchases time or activity in newsletters, the frequency and amount of purchases.

• Cohort analysis shows how subscriber activity changes over time. It demonstrates important user interaction points. By evaluating this report, you will see when users become inactive, so you need to review the retention strategy at a specific stage. For example, large losses at the initial stage may indicate the need to improve the onboarding of new users. The significant churn rate of loyal customers, in turn, may be related to innovations that appeared at a specific moment: some functions were added/removed, or there were noticeable changes in the price-quality ratio.

Direct Retention Channels in Mobile Applications

Through messages in various channels, we help the user learn the application, encourage action, and understand the value of the product. Popular campaigns include:

• onboarding;
• transactional messages;
• informing about bonuses and discounts;
• cross-sell and upsell campaigns;
• abandoned actions (views, carts, search);
• feedback collection, etc.

Let's consider the channels that will help keep users in the application.

Mobile Push

This channel can deliver messages when the app is closed. Depending on the settings of the device, the pushes come with or without sound and will "hang" in the curtain until the moment of reading.

In this way, IntellectoKids, the educational and entertainment project for children, uses an omnichannel approach to retain users in the mobile application. The main channels in the communication chain are mobile push and email.

IntellectoKids has 3.6 million users worldwide. The company's goal was to increase revenue by converting users from the free trial to paid subscriptions and to ensure the retention of those who recently subscribed.

With the help of Yespo CDP, the company was able to:

• combine data sources that were stored on different platforms;
• set up automation and segmentation;
• implement 50 omnichannel campaigns, including trial and full conversions, app onboarding, churn prevention, retention, and more.

As a result, IntellectoKids achieved:

• customer churn rate decreased by 30%;
• increasing ROMI by 2 times;
• +7.5% growth in the trial version conversion;
• +10% growth in the subscription conversion rate;
• the application activation speed increased by 25%.

In-App Messages

Such messages appear in the application when a person uses it. They accompany and inform the user, prompt or ask for feedback, creating a quality interaction experience. Permission from the user to receive in-app messages is not required.

App Inbox

This channel helps keep the user focused on current offers and news. Messages are not annoying because they are delivered to the inbox of the application itself and disappear when the offer validity expires. The notification icon shows the number of unread messages to draw people's attention.

In this channel, you can duplicate push messages that the user could have accidentally missed without reading them.

Email

A good rule of thumb is to send important information via email, such as login details, payment confirmations, monthly subscription charge alerts, etc. Compared to other channels, email contains the largest amount of content and has a high level of trust and flexible design and structure options.

SMS

SMS messages are usually part of omnichannel scenarios. It is less often used as an independent channel. According to the Litmus 2021 SMS Marketing Benchmarks Report, the SMS open rate reaches 96%. These short messages will help convey important information to the customer that must be read.

Instant Messengers

Today, the communication funnel will not be complete without instant messengers. Viber leads the top among popular applications for communication with retail brands. As of our experience, messenger mailings have an open rate of 70% for promotional campaigns and 100% for trigger campaigns.

Modern customers use many communication channels for different goals. To reach the audience better and increase the conversion to the target business action, omnichannel marketing is a worth-considering solution. The more opportunities you have to maintain engagement across different channels, the better retention rate you will have.

For example, the user did not consent to receiving mobile pushes and unsubscribed from the email newsletter. However, the presence of other channels ensures your communication goes on. Indeed, most applications require the users to enter a phone number for profile activation, so you can send a message through other channels. In the application itself it could be in-app and app inbox, or you can use their phone number to send SMS and Viber messages. The use of different channels expands the possibilities of business interaction with the user and increases the chances of success of each campaign.

Conclusion

In order for the application to scale and the number of regular users to grow steadily, a business needs to know its customers as well as possible and interact with them in a personalized and timely manner. For this, you need the following tools:

• analysis of user data, in particular – behavioral data;
• in-depth segmentation of the audience according to detailed conditions;
• forecast of future customer actions, including purchases or outflows;
• analysis of activity in newsletters and sales;
• personalized communication, including the selection of individual offers for each user;
• automated omnichannel campaigns using mob push, In-app, app inbox, email, SMS, and messengers.

A full-fledged solution that can consolidate all this data and organize effective customer communication is a customer data platform. The real use cases of different businesses prove the effectiveness of using CDP:

• Prom.ua, Ukraine's largest marketplace, was able to increase retention by 4%;
• IntellectoKids, the educational and entertainment application for children, reduced customer churn rate by 30%;
• The Ukrainian food delivery service increased the CLTV by 12%.

Do you also want to improve user retention for your mobile app? Then, strengthen your business with a Yespo customer data platform today!

Get professional expertise