Article

Gal Ekstein
Gal Ekstein 27 January 2023

Short-Termism Won’t Get App Marketers Through the Recession: It’s Time to Prioritise Retention

App marketers are adjusting their strategies in line with shifting business priorities, but driving installs and user acquisition is only one part of the equation.

User acquisition has become more challenging for app marketers. Volatile cost per install rates (CPIs), media inflation, reduced manpower, and smaller, scrutinised budgets are increasing the pressure to do much more with much less.

On top of this, app marketers are contending with privacy changes that make it trickier to reach the right audiences and measure their mobile campaigns. Between Q1 and Q2 2022, levels of spend on app installs dropped 14% following a 2% increase between Q4 2021 and Q1 2022.

The value of retaining users should not be underestimated as both businesses and consumer brace for a recession. Focusing on retention will help app marketers weather the current conditions and place them in a stronger position long-term, reducing churn rates and the associated costs, but what actionable steps can they take to achieve this?

Building a View of User Retention

If app marketers want to maximise something, they first need to measure it. Quantifying user retention is key to understanding how many users return to an app and engage with it on a regular basis. App marketers can use metrics such as uninstall rate, session frequency, and session duration to monitor the performance of their strategies against their goal. 

But lack of retention isn’t only about how frequently people uninstall or use an app, it’s also about whether they are using it for its intended purpose.

For example, if retail app users regularly leave items in their basket without checking out, then they aren’t using the app in the way retailers want them to. In this scenario, knowing the level of cart abandonment enables app marketers to set a benchmark for their re-engagement strategies. 

This lays the groundwork for informed mobile campaigns and meaningful interactions with users. It allows app marketers to understand what brings value to their user bases, drives engagement, and builds those long-term connections that result in high user retention.

Knowing retention levels is also important for calculating the lifetime value (LTV) of user bases, which in turn can enable more precise and effective targeting for mobile app campaigns. 

Making Every Penny Work Smarter

Budgets are once more under the magnifying glass, making app marketers laser-focused on maximising their ad spend. In 2022, overall media spend declined by 12%, a change four times greater than the 3% decrease experienced in 2021. When every penny must deliver tangible value, ‘spray and pray’ tactics won’t be sustainable, and precision is paramount.

By identifying user segments with high LTV, app marketers can reach the right users and effectively drive ongoing success. One way to predict LTV is through monitoring in-app events, as specific patterns in user behaviours can point to high LTV. 

How frequently users engage with an app, what features they use, and which in-app events they complete can provide insight into the probability of them renewing an app subscription or conducting a purchase.

For example, ecommerce app marketers could learn that users who make an in-app purchase above a certain amount in the first week of using the app are more likely to become loyal customers and make repeat orders. With these insights, app marketers can discover the best user segments to target for their mobile campaigns. This precision means budgets work smarter to deliver against marketing goals. 

Leveraging Cost-Effective Media to Drive Impact

As ongoing user interactions are the bedrock of retention, app marketers must keep users aware of fresh content and new products, and drive engagement. Media inflation is causing app marketers to focus on using owned channels as a cost-effective means to achieve this. By following a number of best practices, app marketers can heighten the impact of their owned media strategies. 

The first step is to set benchmarks, which highlights the need for quantifying user retention. App marketers must understand the current status quo and set clear, measurable targets, such as reducing churn rate by 5%.

Then the user insights come into play; knowing where users are in their journeys and what points of friction they might be experiencing is critical.  These steps inform what kind of content and which particular channels app marketers need for their owned media strategy.

For instance, if app marketers are looking to drive engagement by announcing a new app feature, it could be that a push notification is best suited to motivating users to open the app and try it out. Alternatively, app marketers could boost consideration for a newly launched product via their newsletter and include a call to action that seamlessly takes users from the newsletter to the relevant in-app content.

Experimenting with different channels and formats will help app marketers identify the most impactful ones to use. Since owned media not only ensures complete control over content creation, but is also free, adopting a test-and-learn approach doesn’t risk ad spend. 

As part of this approach, app marketers must compare the performance of their owned media strategy with their initial benchmarks and targets. This allows them to pinpoint which efforts are generating the most impact and which areas are in need of improvement and optimisation. To maximise performance, ongoing analysis is pivotal. 

By making retention their core objective and strengthening their connections with users, app marketers can not only survive current economic pressures, but also thrive long-term. Benchmarking retention, taking a precise approach to targeting, and refining owned media strategies to boost engagement enables app marketers to sustain their user bases and improve their bottom line.

User acquisition has become more challenging for app marketers. Volatile cost per install rates (CPIs), media inflation, reduced manpower, and smaller, scrutinised budgets are increasing the pressure to do much more with much less.

On top of this, app marketers are contending with privacy changes that make it trickier to reach the right audiences and measure their mobile campaigns. Between Q1 and Q2 2022, levels of spend on app installs dropped 14% following a 2% increase between Q4 2021 and Q1 2022. 

App marketers are adjusting their strategies in line with shifting business priorities, but driving installs and user acquisition is only one part of the equation. The value of retaining users should not be underestimated as both businesses and consumer brace for a recession.

Focusing on retention will help app marketers weather the current conditions and place them in a stronger position long-term, reducing churn rates and the associated costs, but what actionable steps can they take to achieve this?

Building a View of User Retention

If app marketers want to maximise something, they first need to measure it. Quantifying user retention is key to understanding how many users return to an app and engage with it on a regular basis. App marketers can use metrics such as uninstall rate, session frequency, and session duration to monitor the performance of their strategies against their goal. 

But lack of retention isn’t only about how frequently people uninstall or use an app, it’s also about whether they are using it for its intended purpose.

For example, if retail app users regularly leave items in their basket without checking out, then they aren’t using the app in the way retailers want them to. In this scenario, knowing the level of cart abandonment enables app marketers to set a benchmark for their re-engagement strategies. 

This lays the groundwork for informed mobile campaigns and meaningful interactions with users. It allows app marketers to understand what brings value to their user bases, drives engagement, and builds those long-term connections that result in high user retention.

Knowing retention levels is also important for calculating the lifetime value (LTV) of user bases, which in turn can enable more precise and effective targeting for mobile app campaigns. 

pawan Sharma
pawan Sharma

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