Engagement
Arguably the most important of them all, engagement is a metric that quantifies the positive outcome of users' experience within the app. What engagement looks like will vary drastically, depending on the app's purpose. For example, a retail app will likely monitor engagement based on the sales they make per measured period. Or, an app like TikTok is more concerned with the number of minutes each video is viewed for. As an individual company, you must determine what actions are intrinsically important to your growth and development. For example, some apps require daily usage to create enough revenue to scale, while others are used less often but may have higher price tags on their products. A few simple suggestions that can significantly increase engagement are proper onboarding, in-app communication, support, offering incentives, and using push notifications as a gentle reminder. Engagement can be measured by simply dividing the number of actions taken by the number of active users in a day.
Retention Rate
Simply put, the higher the retention rate, the more revenue for your company overall. This metric speaks to the number of customers you are able to retain during each measured time period. For example, a monthly retention rate of 25% is generally considered positive. Seeking to understand why customers you retain stick around and diagnosing at what point other users drop off can give you insight into what areas of the app may need improvement. Monitoring the retention rate following any significant changes to the app is a great way to determine whether these changes are beneficial or detrimental to the company. If your retention rate remains the same following a shift in the app, you can comfortably assume users either approve or are indifferent to the tweaks. Inversely, if your retention rate plummets after a change, you'll be better equipped to reverse it quickly to avoid a more significant loss. Social media apps like Instagram have experienced drops in retention rates as they change their algorithm, which has upset users in the past. By reverting to the original form, they were able to bring back many of the customers that had churned. Ultimately, a high retention rate is absolutely essential for the growth of your app. As you expand into new markets and diversify your customer base, you must first prioritize keeping the users you have been able to successfully score. Otherwise, the growth will ultimately become stagnant. By keeping a high retention rate as well as expanding and gaining new business, your app can grow quickly and efficiently.
Session Length
The length of time that a user is active within the app is known as the session length. This begins from the moment they open the app and ends as soon as they close out. This directly correlates to the value that your app holds for the user. The greater the value, the longer the session length will run. Though it varies drastically from app to app, any session length of one minute or less is considered detrimental. One of the most important aspects of session length is its ability to result in a sale. In general, the longer a user is active within the app, the greater the chance of them making a purchase. If you notice low session lengths, this is a perfect opportunity to analyze your demographic and determine what the app may lack that users are looking for. Getting to know your customer base on an intimate level will guide you in your journey to understand what users are truly looking for when they open your app.
Lifetime Value
The easiest way to explain lifetime value is by describing it as the value of a single customer from the time they download your app to the time they uninstall or delete it. Their "lifetime" as your customer will bring in a certain amount of revenue, whether that is from transactions, monthly fees, download costs, etc. Lifetime value is another metric that varies drastically, depending on the type of app. The most important outcome of calculating lifetime value is determining whether you are getting a return on your marketing investment. It takes money to make money, as they say. But, it should not take more money than you are intaking each measured period. This will vary in the beginning stages of app development and launch, but once your app is up and running, lifetime value should indicate a positive income for the company.
Stickiness
Aptly named, this metric refers to the number of users that stick around, month after month. Not to be confused with retention rate, stickiness calculates the users that return over a greater length of time. It can also refer to the amount of time the users are active in the app. Arguably the best way to increase the stickiness rate is by creating unique, engaging content that hooks users and holds their interest. This is exceptionally hard to do now, thanks partly to shortened attention spans and saturation in most markets. Even so, this can be successfully done with the right amount of knowledge regarding your user's interests and needs, as well as what they enjoy seeing most. In general, the higher the stickiness rate, the more lucrative the app is overall. Increased revenue and decreased churn allow the app to scale quickly and efficiently.
Return On Investment (ROI)
Marketing is a vital but expensive aspect of growing a company. Proper marketing can run upwards of thousands of dollars per year, but if the return on investment is high enough, it ultimately does not matter. Confounding variables can make a return on investment tricky to calculate, but it is still extremely valuable information. The investments your app makes to scale, build a solid customer base, and market itself all result in some amount of revenue. Ideally, the return on investment will tip the scales in your app's favor, and the revenue will be significant enough to make the investments worth splurging on. Calculating return on investment can be done by subtracting the cost of the total investment from the revenue gained from the investment and dividing that number by the cost of the investment.
Average Revenue Per User
The average revenue from each app user plays an intricate role in the overall return on investment. It also contributes to the lifetime value, but what sets this metric apart is that it focuses on exactly how much revenue each individual user is bringing your company. Especially with apps that offer a variety of packages or plans, this rate can be wildly different for users within the app. An example of this can be seen from Meta, as they have publicly released their ARPU. In 2019, their ARPU was $29.25. With a social media business this large, it may seem like this number is unachievable, but on the contrary, with the proper focus on user needs, smaller scale apps can find their ARPU even higher than this. This metric is fundamental to monitor as it directly correlates to the app's future success. Consistent growth in the average revenue per user is a good indication that your app is on its way to continued success.
Lead Conversion Rate
Leads are the potential users that your app works to convert into actual, paying customers. The lead conversion rate measures the number of successful conversions that take place over a specific period of time. Many apps offer free trials, which can be a great way to hook users and convert sales. When it comes to finding leads, it is vital to focus on quality over quantity. By honing in on your specific demographic, you can avoid wasting valuable time and energy marketing to the wrong group of people. Intentional marketing and lead finding will pay off when you acquire the kind of customers that will benefit the most from your product. As a result, these customers are more likely to stick around for the long term, too. It is essential to understand your app's lead conversion rate to determine whether the lead management process is effective. With low conversion rates comes a likely gap in efficiency. App companies can calculate their success rate by comparing the number of free users that choose to continue past their free trial period. Lead conversion rate is calculated by dividing the number of new customers by the number of leads and multiplying it by one hundred.
Churn Rate
This metric is actually the inverse of the retention rate. Churn rate refers to the number of customers who either delete or unsubscribe from your app. Not surprisingly, the churn rate should be kept to a minimum. When customers churn, companies are handed a clear sign that something needs to be addressed. This could be an algorithm tweak, a superficial change to the app's appearance, or even a lack of proper customer service. This metric area has a tendency to be overlooked as companies focus more on the customers they gain and their retention rates. Unfortunately, churn rates can have a damaging effect on the company's ability to expand if not attended to. Especially for a high significance of churn, it is vital to explore possible explanations for this and to work to lower this rate before prioritizing new customers. Churn rates can be attributed to a lack of engaging content, customer dissatisfaction, faulty customer support, bugs within the app, or maybe you are simply attracting the wrong kind of customers for what your app is offering. By paying attention to this critical metric, you can quickly intervene to address any potential issues resulting in churn. You can easily calculate this metric by subtracting the number of users at the end of a period from the number at the beginning of the period. Typically, the churn rate is most effective when calculated monthly. Ideally, companies will have churn rates lower than 10%, and anything under 5% is considered exceptional.
