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Acquisition or retention – have you been doing it wrong all along?

Whilst there’s little doubt of the importance of acquiring users, your mobile apps on a hiding to nowhere if you can’t keep a hold of them. Yet companies are still spending more on acquisition than retention, and an even larger percentage are sitting on the fence taking neither one stance nor the other. If you’re on that fence, or if you’re starting to realize that your finely tuned focus on acquisition isn’t working, it might be time to take a step back and revisit retention. But what does that look like, what are the advantages and how are you going to do it? Well, it’s funny you should ask …

We concur, acquisition matters – but …

In the US, the average CPI (Cost Per Install) range differs across verticals and platforms, but the average sits at around $2, rising to $3.34 at the top end. When app creators are willing to spend such a large chunk of their budget on acquisition – App Store Optimization (ASO), paid campaigns, ads – leaving something behind in the coffers for retention can sometimes be overlooked, and by many, often forgotten.

Some facts and figures to whet your retention appetite:

  • Acquiring a new customer is between five and twenty-five times more costly than retaining an existing customer.
  • Selling to a customer you already have has a success rate of between 60-70%, compared with a measly 5-20% success rate of selling to a new customer.
  • 44% of businesses say their focus is on acquisition, with just 18% looking at retention.
  • Increasing customer retention by just 5% can boost profits by between 25 and 95%.

… and yet, despite the evidence, most companies we talk to when it comes to metrics, measurement and money are hell-bent on committing a greater spend on acquiring new users than keeping the ones they already have. You could of course say, that in a way, they’d be right. After all, if no one downloads your app, there won’t be any customers to nurture and retain. But that doesn’t take away from the fact that no matter how impressive your acquisition numbers, failure to live up to – and exceed- user expectations means that users will continue to uninstall the apps that don’t measure up faster than you can say, “Baby, please don’t go”. Think your app’s too good to bin? Almost 1 in every 2 app downloads are uninstalled within 30 days, or to put it in business-speak, “Help, we’re hemorrhaging cash!”. I don’t know about you, but it feels like some kind of equilibrium needs to be found between acquisition and retention, one that neglects neither one nor the other, but instead brings ‘smart’ to the spread of marketing efforts and increasing the chances of a long-distance run in the App Store.

“Get closer than ever to your customers. So close that you tell them what they need before they realize it themselves,” – Mr. Jobs.

App acquisition – where are we now?

Inhabiting an increasingly mobile world has seen the mobile app industry morph into one of the single most successful stories of the 21st digital century. In this app gold rush, however, we’ve also witnessed an unsustainable infatuation with seemingly lucrative short-term gains and endless growth hacks – most of which have ultimately turned out to be empty promises (much to the chagrin of your accountant). We’re just starting to realize that only a well-defined, well-researched app strategy- one that embodies everything we now know about the makings of long-term app success – paves the way to both profitability and sustainability.

According to Gartner, 80% of your business’s future profits will come from just 20% of your existing customer base. Which means that the big budget spend on acquisition you insisted on last quarter might have been more effective if you’d been willing to look at what you’ve already got. Retaining these users will make the difference between your app’s success – or its sad decline and the long, expensive walk of shame to the big uninstall bin in the sky. Time to stop the madness.

How to boost your Mobile App Retention Rates

80% of users churn within 3 days after downloading an app. The message is clear – have an engagement strategy in place long before your app even makes it through the door of the App Store. Why? Retaining users is really all about engagement. From a smooth onboarding experience to easy in-app purchases, to gentle, effective nudges to complete your critical events, retention is all about keeping your users interested throughout their app journey. What exactly is retention? Most of us in the industry would say that it means a user returning to your app at least once over a 30-day period – which doesn’t seem like such a big ask. It’s worth noting that we tend to measure retention over a 90 day – or one quarter – timeframe. With this in mind, it’s a good time to drop the average retention rate bomb so that we can start thinking about where we’d like to get to: around 20% after that 90-day period. It’s not high, but there’s room for improvement! It’s time to step up to the retention plate, making retention one of these ever-changing KPIs your marketing department loves to talk about at these Monday meetings. Here’s how to wow them with a dazzling grasp of retention tactics:

  1. Perfect your app’s “low barrier” to entry. No one wants to spend an inordinate amount of time and effort downloading and using a mobile app – life asks enough of all of us (including these Monday meetings) without your app asking for even more. In other words, I expect your app to do all the hard work for me, which means ensuring the onboarding process is smooth, simple and as swift as possible. If I need to book time off work to run thru your movie-length video tutorials, to complete my registration or to figure out what exactly it is that you’re bringing to party, your churn rates will go through the roof. Key takeaway: kick off with a simple app that does what it says on the tin and takes the friction out of it at the same time, you’re halfway there already …
  2. Personalization, personalization, personalization!  Delivering a personal, valuable, human brand experience that our new digital customers demand is the holy grail of retention. And unless you’re not living in the 21st century (in which case, welcome time traveler!) then you can’t fail to have noticed that any 2020 brand worth its digital salt will have customer personalization at its beating heart, and for good reason. Companies getting smart around the Big P see between a 5 and 15 percent increase in revenues, and a 10-30% percent increase in marketing-spend efficiency.
72% of consumers will only engage with personalized marketing messages.

What does personalization look like? Take your pick: customized push notifications, personalized product recommendations; valuable, feels-like-all-mine rewards and offers; location-based marketing and much, much more. Check out these apps to get an idea of IRL personalization – your retention metrics will thank you for it:

  1. Starbucks – we talked about Starbucks in our recent loyalty apps piece, and here they are again because, frankly, they’re good at what they do when it comes to their customers ad personalization. From relevant rewards to personalized discounts to products suggestions based on previous purchases, this is every app developers first stop when looking at the brands that are getting it right.
  2. Airbnb – accommodation behemoth Airbnb have personalization down to a finely tuned art, tracking your trips, travel preferences and likes, pooling data and matching you with listings that they think you’ll like. But that’s not all … you’ll also get suggestions for restaurants, bars, tourist hotspots, shopping and just about any other holiday activity you can think of – just for you.
  3. Spotify – Never a brand for standing still, Spotify continues to take personalization to ever more fun levels … from Discover to new releases, nearby concerts to Taste breakers, there’s no excuse for listening to that same damned playlist over and over. Spotify analyzes what you’re listening to, and over time builds up a profile of the kind of music you like – or might be open to liking – and serves it up as you like it.

Make it a habit. Not that we’re trying to start a new Apps Anonymous movement, but habit is a retention technique as old as the proverbial hills. The average mobile user checks her phone around 150 times per day. Boredom? Perhaps. Hunger? Possibly – I’ve got over half a dozen food ordering apps on mine. Habit? Now you’re talkin! If you thought you were looking at Instagram, Twitter or Facebook because you want to let off election steam, or to laugh at Terrible Art in Charity Shops, you’re wrong. The reason these apps are so successful is because they’ve invested time and money in ensuring that they’re quite literally habit-forming. Nir Eyal, the habit-formation guru, believes that one week is all you’ve got to create your app habit with a new user: “If your product doesn’t engage people within a week’s time or less, it’s going to be very, very difficult to build a habit around it.” 

The hook model

The Hook model – of course.

Many call this habit-formation strategy the ‘hook’ model; one that involves four key elements

  • The App Trigger – The trigger is what compels a user to complete an action within your app and can be either internal or external. For example, a notification from a bank app reminding a user to top up their balance to avoid going into overdraft would be an external trigger. The internal trigger is that (oh so familiar) feeling of boredom that compels someone to open the Instagram app.
  • The Action – Users take app actions for all manner of reasons, but psychologically, reward tends to be at the heart of many of our in-app actions, even though we’re not aware of it (most of the time). Taking the example above of topping up your balance in your banking app; sure, the reward of not being overdrawn is compelling enough, but seeing our balance onscreen in a juicy green with a big plus sign beside it is psychologically both reassuring and satisfying. Bring an on-screen message into the equation: “Hey, you just earned 10 rewards points for topping up your balance!!”, and you start to get an idea of how powerful the Action element of retention is. Note: make sure the actions you implement require as little effort as possible, and that the reward is immediate.
  • The Reward – Our virtual friend Nil describes the reward as an ‘itch being scratched’ – and we concur. The rewards are usually why your audience uses your app at all – creating desire and anticipation, then reliably satiating it with relevant and valuable rewards. There are all kinds of ways apps reward us – and often they’re nothing to do with how most of us traditionally understand them – on Instagram and Facebook, for example, the rewards are likes and comments, and lord knows isn’t that why we keep checking in? Rewards and crucial in the retention game. Neglect at your peril!
  • The Investment – When users invest in your app, the hook model’s work is done. By successfully combining the trigger, the action and the reward, you’ve got a user who’s well on their way to making your app part of their life … in other words your user and your app and officially an item, or ‘invested’ in each other. The investment element ensures that not only do your users want to check in, but they’ve got a vested interest in doing so.

Use push notifications. Almost without exception, push notifications are the single most-effective method of engaging – and retaining – your user-base – study after study has found that using push notifications as a key element of your app marketing strategy can boost retention by up to 20% – not to be scoffed at!   However, push notifications can harm as well as help your app retention rates if you approach them gung-ho. The challenge lies in striking the right balance of timing, frequency and value – get it right, and you’ll be laughing all the way to these Monday meetings… get it wrong and you could end up with a whole lotta users who quite frankly don’t want to hear from you anymore, thanks very much. The bottom line? Planning is everything. To find out how to push properly, visit our musings on that very matter here.

Provide an exceptional customer service. To be honest, this is something that any brand worth its salt should be doing in 2020, and not only our mobile app overlords. We all expect it, which is why when a company falls short of providing it, we’re often incandescent with rage, inconsolable and taking to whatever social platform it is to vent our spleen. When it comes to retention, customer service matters – pre-purchase, post-purchase and everything in between. What does it look like within your mobile app? 

  • Easy to find ‘contact’ buttons
  • ‘Call back’ functionality
  • A Knowledge Base; help center; community area or FAQs center where users can access quick answers to general questions
  • A Chat facility to connect users to customer service reps
  • The provision of detailed product information
  • A location finder

…. are just a few ideas. Just remember to ensure that you cover all of your touchpoints. Lots of us still like to use email instead of chatting to an empty screen (take note: if you’re providing a service like chat, ensure there are humans at your side to respond, and in a timely manner!)

Before we go …

In all fairness, app retention is a science – you could add an almost infinite number of strategies to the above list, and you’d still discover something you’re not doing but that your competitor is nailing. The long and the short: if you’ve just launched your app and you’re seeing your retention numbers take a tumble, panic ye not! Retention is a long-haul activity that you’ll fine tune over time, filtering out what doesn’t work, and learning what does. But it doesn’t sit on its own … Smashing your customer retention strategy requires rethinking how you work with your budgets and investing in the technologies that will help you to measure, achieve – and exceed – your retention goals. Maybe you’ll be one of the lucky ones (note: luck = hard work) and succeed at retaining half of your user-base … maybe, like the rest of us, you’ll be tipping the average, which, in the ever-growing world of mobile apps is pretty darn successful.

What to do next

Here at Kumulos our focus is on helping you to retain your hard-won audience through engagement. Push notifications have always been the most effective way to engage app users and Kumulos gives you all the tools to send rich, interactive messaging campaigns. The only platform that allows you to analyze campaign performance from both a commercial and technical standpoint. Book your free demo to see how Kumulos can turn your app users into loyal customers.

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