Tag: app

MAU vs DAU: How to measure mobile app retention

Mobile app rentention

Generating more downloads and attracting new users to your app can be (and generally is) an expensive business. It’s estimated that a 5% decrease in mobile app abandonment rates can actually increase overall app profitability from as little as 5% to as much as 95% (Bain and Company). While decreasing app abandonment rates can greatly improve profitability, it costs approximately 700% more to acquire a new mobile app user than to stimulate retention with existing users. If you’re running a mobile app development agency, it’s essential that you represent the best commercial and technical interests of your clients. Their success is your success and the best way to maximize the chances of a successful outcome is to focus on mobile app user retention.

Before we go further, here’s a great panel discussion on some of the issues that we’ll be writing about:

When it comes to developing mobile apps for your clients, your contribution won’t end when you deliver them their app. The days of being able to “drop-ship” an app to a client and walk away are over. Clients now expect you to be with them for the long haul, helping them make their app a success. With any clients app you have to ask yourself the question: how sticky is the app? In the same way that digital marketers are concerned with the engagement levels of blog content, videos and reviews (and a multitude of other types of content), app clients are concerned with one fundamental consideration: are my app users coming back for more? So serious mobile agencies are going beyond the design and development of great mobile apps. They are focused on how to leverage more value from those apps on behalf of your clients’. To do that they are increasingly thinking about how to measure retention.

Getting serious with mobile app retention

There’s a bunch of different ways to measure the retention performance of your clients mobile apps. Getting started with mobile app retention is all about understanding the needs of your app client, and each approach will possess its own merits and shortfalls in terms of selecting the right retention methodology. But the important thing is to focus on what matters. Bringing in new users at the top of the funnel via marketing efforts is totally superfluous if the bucket itself is full of holes and the UX of the app sucks. Mobile app retention is all about fixing the bucket, and making sure that the overall UX of your client’s app is adding genuine value to the experience of the user. So always start with the end in mind. It’s all too easy (and costly) bringing users in via paid channels, but getting them to hang around is a different ball game.

The purpose of mobile app user retention

The goal for each of your app clients is to convert each new app user into a paying customer or loyal advocate (depending on the industry sector and purpose of the app). Your job, as a mobile app agency owner, is to help take your clients on that journey. To to this it’s important to keep the purpose of what you’re trying to do clear: focus primarily on retaining the people you’ve already attracted and learn how to drive more engagement and revenue for your clients.
mau-vs-dau

Here’s a short article to give you some ideas on how to improve app engagement.

This will help you to grow a profitable app development agency, built around mobile apps that produce tangible results for your clients.

If your client’s mobile app is churning too many users after a single use, you have a serious problem, purely due to the cost of attracting new users vs. the cost of retaining existing app users. This comes back to the leaky bucket analogy, because the economics of filling the bucket in order to patch it up are incredibly costly and damaging to your client’s commercial welfare. This is why the economics of mobile app marketing will always favor retention over acquisition.  So with this in mind, consider very carefully how and where you invest your clients technical and commercial resources and always keep the end in mind: what does success look like? This is a difficult question to answer, but when it comes to industry benchmarks for mobile app retention, there are some guidelines, which will be covered later in the article. Based on the fact that you can only optimize what you already measure selecting the right retention methodology is the first step in the process.

Each mobile app client will view the science of retention from a slightly different perspective. If you’re developing a mobile game, you’ll live and die by the retention performance of the software on day one. If it sucks first time round post launch, you probably won’t get another chance to fix it. On the other hand, if your client has a B2B app where take-up will be slower, you might need to think about starting to track retention at a much later date, maybe month eighteen. The better you can understand their app, their commercial goals and the journey each of their users take through the app, the better positioned you’ll be to nurture it to success.  In order to choose the right mobile app retention methodology to use, you’ll need to understand which options are available. This is where snapshot retention comes in.

What is snapshot retention for mobile app users?

Snapshot retention is a specific method of measuring the retention rates of mobile app users. It refers to a retention methodology that’s based on a snapshot of time of mobile app user activity. This is one of the best places to start if you’re trying to figure out the easiest and most basic way to measure retention rates for your app clients. Start off thinking about your client’s business goals and what they want to achieve. If the launch of the app is being run in parallel with an expensive marketing campaign, and the goal is to generate paying customers quickly, you’ll need to snapshot different time periods. The first day will be essential, but it won’t provide the full picture and help to identify if the app is sticky. This may only become clear after several days or weeks (or possibly months and years), so it’s essential that you work out the best way to measure each snapshot of app user retention in terms of time. But what matters, is that when you’ve decided on the right time frame, you’ll end up with one very concise way to express mobile app user retention as a single metric (or ratio).

The MAU vs DAU ratio for mobile app user retention

The MAU vs DAU ratio is a great example of a snapshot metric, whereby the DAU’s and MAU’s are simply the number of unique mobile app users who engaged with your client’s mobile software during a specific time period. A DAU, or daily active user, measures the number of unique app users in any given one day time period (often you’ll be referring to the performance of your client’s app for the previous day). An MAU, or monthly active user, measures the total volume of unique mobile app users, who are active in any given month or thirty day timeframe. This will typically be a rolling thirty-day time window whereby you can glean performance insight not just by each calendar month, but also by a fixed or ‘windowed’ thirty-day time period.

mau-vs-dauOnce you have your MAU vs DAU metrics for a given timeframe, calculating mobile app retention rate is just a simple process of developing a ratio of DAU’s to MAU’s. Instinctively, when it comes to working with your app clients, this should represent the proportion of monthly app users that are active on a single day. Clearly, when it comes to enhancing the performance of your client’s app, the job is to increase the ratio, ensuring that you maximize the proportion of MAU’s who are liable to actively interact with their mobile app on a single day. Once you have the data, you’ll be in a position to make recommendations in terms of changes that can be made to the app, in order to cause a greater proportion of users to interact with the software on a regular basis. What you’re striving to achieve, is a ratio of one, because this means that every single mobile app user who engaged with the app in the last month, is active again on any chosen day.

Again, getting this part right will depend on the type of app your client has. Different apps will have different DAU/MAU benchmarks. It’s all to do with what the expected frequency of use should be. If it’s an app that is to do with something the user will do every day, then you’d expect the engaged user to be using the app daily. A diet tracking app for example. If it’s an app that you’d expect less frequent use, a restaurant booking app, then monthly may be the expected use frequency. It’s about setting the right benchmark use for the individual app. Irrespective, it’s essential to continually track the DAU/MAU ratio, to make sure its getting better and not worse. A falling ratio is a good lead indicator that things need addressing.  Rule of thumb, for most mobile apps, 0.20 DAU/MAU is considered to represent decent level of engagement. So generally speaking, if 20% of MAU’s are interacting with the app on a daily basis, this is good. Another option is to consider using a DOD (or ‘day over day’) retention metric.

What is day-over-day (DOD) retention for measuring mobile app performance?

DOD retention is much like the MAU/DAU ratio, but provides a detailed snapshot metric. With DOD retention analysis of mobile app user behavior, you simply establish the ratio of the app users who are active today and yesterday, relative to the number of app users who were only active yesterday. This retention measurement ratio symbolizes the proportion of users who are liable to use your client’s app regularly in a short timeframe. In order to calculate this ratio, you establish the number of users who were active yesterday and today, and divide by the total number of users who were only active yesterday.

The constraints and limitations of snapshot retention for measuring mobile app performance
Helping your clients succeed and nurturing their apps to success, it’s going to be important establishing a mechanism for measuring mobile app users. Some of the methods detailed in this blog post represent a good starting position and will increase your client’s chances of success in mobile. As always, your ability to track the right data points will depend on your ability to garner the right information, and this means having a robust analytics platform. You must always ensure that this has been considered at the front end of your client’s project. You need to think about developing a clear and concise series of KPI’s and understand in detail how snapshot retention can bolster performance over time. But snapshot retention metrics are relatively simple in their nature, and do possess certain drawbacks and constraints:

  • These techniques will determine all mobile app users who are active only during a certain snapshot, regardless of when their first touch point was with your clients app
  • This provides very little or no distinction between mobile app users who are completely new to the software, and habitual mobile app users who could be considered as advocates or evangelists
  • Determining the cause of why specific data patterns appear in the analytics can be extremely difficult and understanding how to improve mobile app performance and knowing what to do can be ever harder.

That said, having the data that helps you build insight into how the app is performing at least arms you to ask the right questions and dig for the solutions.

How to avoid an unhealthy DAU/MAU ratio

So you’ve spent months, designing, developing, testing and polishing your client’s mobile app and it’s now ready for launch. You’ve established your KPI’s and key measures of success. You’ve also integrated an analytics package that enables you to track mobile app retention performance. Now what?

mau-vs-dauThe classic mistake to make when launching a new mobile app for your client is to focus on creating a bloated MAU ratio. If you accompany the launch of the app with an integrated marketing campaign, you’ll likely see a huge spike in activity in the first day or two after launch. Adopting this type of ‘Hollywood or bust’ approach, whereby you rely solely on the success of an initial marketing flurry, is liable to result in failure and an unhappy app client.  Getting this process right requires time and making sure you know when to bring new users in at the top of the funnel. The best time to bring new users in at the top of the funnel, is when you know that your bucket is fixed, and you’ve maximized the probability that the greatest number of users possible will use the mobile app on a regular basis.

The problem is that all too often, an impressive MAU metric is viewed as being a positive thing. What tends to happen, is that users who were acquired as part of a ‘Hollywood or bust’ style marketing campaign, will possess a significantly higher churn rate than other mobile users. The fact of the matter is your client does need a large MAU metric. Your client wants the type of mobile app user who isn’t just a passer by. Your client wants the type of app user who discovers the software and sticks around because the features contained within the app are delivering something of value to them. The net effect of this type of marketing approach, is usually a weak DAU/MAU metric and the key to solving this problem lies in relentless and pragmatic approach to measuring and refining the onboarding and in-app experience. What’s more, an initial burst of marketing activity will impact the MAU metric within the first thirty days, but it wont explain what’s actually happened or why. So a good MAU metric on its own is a vanity measure and one that offers very little insight into whether the app is succeeding or not.

Conclusion

In conclusion, the best way to approach this problem on behalf of your app clients is to tread a careful line between mobile app user acquisition and retention. Yes, you need to bring users into the app in order to test if the bucket has holes, and this involves marketing be it paid or organic. But the trick here is not to over invest in marketing that is ultimately the equivalent of pouring water in a bucket full of holes. You need to pour in just enough water, without over investing; in order to get the right data to inform how you fix the UX issues associated with your client’s app.

If you’re a mobile app agency looking to bolster the retention performance of your client’s mobile app (or apps), Kumulos can help. Our Mobile App Agency Platform comes with integrated app Analytics to let you measure engagement and Push Notifications to manage engagement programs. This lets you offer your clients App Engagement Services that helps drive the right outcome for your clients and get apps on retainer, so you build reliable recurring revenue streams for your business.

You can sign-up here today to learn more.

MAU vs. DAU AND MORE

OK, so we’ve told you about MAU vs. DAU, but what about when you have MORE questions about your mobile app business? No worries – we’re here to help. That’s why we’ve started a FREE business webinar series to help out mobile software development agencies.

The webinars are intended for Business Owners, CEO’s, Sales & Marketing VP’s and Commercially minded CTO’s. They’re 100% business focused, so they’ll give you ideas on how to drive more retainer based income for your Mobile App Development Business.

Feel free to look at some of our past webinars, or take a gander at some of our upcoming sessions. These webinars are popular and seats are limited, so be sure to register early.

Five Steps for Building a Successful Mobile App

image of phone - twitter

Mobile apps are so ubiquitous nowadays that almost all companies can think of at least one way in which an app could enhance their business. On top of this, an increasingly large number of hugely successful companies have an app at their very heart – just think of Uber, Shazam and Flipboard if you need a few examples.

Whether you want to build an app to provide a better service to your customers, or build a whole new company around an app in the hope of becoming the next big thing, it’s important to consider certain things before you get started.

This article lists five steps for building a successful mobile app – don’t begin your app development  without reading them!

1. Gain a clear idea of what you’re aiming for

This may sound really obvious, but it’s extremely common to hear of companies wanting an app (after all, “everyone else has got one”) without really having a clear idea of what it’s going to do. These unfocused people can land themselves in a whole range of undesirable situations; Unfocused thinking leads to an unfocused app – and modern technology users are a demanding bunch with a short attention span.

If you don’t have clear ideas, you are at risk of being provided with ideas by app developers who are often only trying to help. While it’s essential to work in partnership with your developers, it’s crucial to start out with a spec for what’s actually needed. The people who best know what your app needs to do are people within the business and, if the company is already in operation, the customers.

2. Be prepared to treat your app as an ongoing project or business

A HUGE misconception about apps is that they are a “job and finish” task. If this were remotely true, we’d never see software updates, and apps would all look the same as they did five years ago!

Even if you don’t think the core of your app will change much, there’s absolutely no way that you won’t have to treat your app almost as a living being.

Technology will move on, customers will demand new features, and sometimes something as simple as an operating system upgrade will require some coding for compatibility. So don’t think of an app as something that’s done once it’s built. This is merely the first step in the journey. This is even more relevant if the app is at the core of your business!

3. Keep an open mind on pricing

There’s no doubt that you’ll be able to find individuals who will build you an app “on the cheap,” such as students who’ve just learned objective C, or inexpensive off-shore freelancers.

image of moneyUnless you’re happy to manage them extremely closely and shoulder some risk, think really carefully about taking this route and allowing a “race to the bottom” in terms of price. As per the previous tip, creating your app is not a one-off job if you want to take it seriously, and plenty of people come unstuck when they end up with an app that’s unsupportable because nobody really understands how it was put together in the first place. This was (and remains) the case with website and database projects too.

What you should pay for an app is a quintessential “how long’s a piece of string?” question. The answer is probably a little more than you’d hoped, but not as much as you’d feared! According to the folks at Dogtown Media, app development can run anywhere from $25,000 up to $500, 000 (and beyond).  Finally, remember that you need to account for the ongoing development and support for your app, and not focus on a one-off headline price.

4. Get a prototype ready

Nothing puts the nails in the coffin of an app more than launching it without proper testing. Consumers can be savage when an app doesn’t provide instant gratification and will show no mercy in uninstalling and leaving a negative review – which (of course) will put off future customers.

For this reason, it’s essential to create a prototype and test it to within an inch of its life, perhaps with a select group of beta testers, before letting it anywhere near the public. Bear in mind too that, as discussed above, your first app release will be a 1.0 version!

This is widely known as a “Minimum Viable Product.” Within days (if not hours) of releasing this, you’ll probably start to think of new features that should be incorporated into version 1.1 and beyond!

5. Launch only when ready!

space shuttle launchingIt’s really unwise to set a date to release your app and stick to it regardless of what happens. Do you want an app released on time to widespread negative reviews, or an app released several weeks late to widespread acclaim? Hopefully the answer is obvious.

Once you have launched, you’ll want to see how your app is performing – obviously the reviews will give you a broad picture, but you can go way beyond this by using mobile analytics to find out exactly how customers are using your app. Analytics will help you find which features are working and which your users are engaging with. From there you can go back, refine, improve, and move towards the next version – just as we discussed above.

What do you think? Any steps we left out for building a successful mobile app? Feel free to leave a comment below!