Mobile App Metrics: How Are They Useful?
Now that you have successfully established an app and released it on a reliable platform. What is the next step? Suppose you are building a relationship. Similar to building a good relationship, you would prefer to know the on-going aspects as to what helps it grow and nourish. Additionally, the perfect way to navigate it must be determined as well. What exactly is working, and what is not? Basically, this insinuates that both of the parties involved – the creator of the application and the targeted audience – are sure that they are gaining and receiving whatever is most beneficial to them. To gain insight on these objectives you have to turn to an optimization method called ‘Mobile App Metrics’.
What are Mobile App Metrics?
This might be an unfamiliar word and the question might be ringing in your head, ‘What is a Mobile App Metric’. Well, for app developers, it is a game-changer. Mobile App Metrics are utilized through the information they offer you. They inform you about the current performance of your application. Consequently, they will keep you aware of retention metrics including engagement. In addition to these, conversion and potential revenue generation of your users is recorded.
Mobile app metrics are vital since a developer or a company cannot figure out whether their apps are prospering or failing miserably. Companies that lack precision in the metrics are forced to rely heavily upon indicators. These broad indicators can be total revenue or total downloads. These top-notch indicators can hide the information that the app may be losing money or going bankrupt. With the assistance of app metrics, companies can instantly view these issues and take action accordingly.
Are App Metrics as Beneficial As They Are Marketed?
While keeping track of your app insights is a wonderful place to start with, a renowned magazine called Inc. Magazine has claimed that this metric can be a little deceptive as eighty to ninety percent of the apps are used just once & then ultimately, deleted.
However, something to consider is that out of all the following app metrics, all of them might not be applicable to your business. It will be a good idea to have an idea of how the numbers should look for every single metric for you before even tracking them. So, in a way, if you scout for the most suitable options and opt for the best one according to your published application then Yes, app metrics might be as beneficial as they are marketed.
Below are the most important metrics, that allow you to take action along with providing the facility to your app engagement.
1. Retention Rate
A vital app metric to comprehend the usefulness of your app is your Retention Rate. It is a given that not all of your users will use your app actively but they might still access it and help you out in a time of need. This metric, as the name suggests, allows you to find out know what percentage of customers you are currently retaining. Now, as a result, you will be able clearly to see how many customers you are losing to churn.
Retention Rate depends entirely on the numbers you place into the given formula. Additionally, it will depend on what you are looking to receive from the retention rate. In the end, all you are doing is comparing a unit of users in the most recent timeframe available (for example, this month), with that same unit of users in an earlier timeframe (could be last month).
Another marvelous way to calculate that you might be interested in is calculating your retention rate using app download. Or, simply, as opposed to app use just first login as the denominator.
So, this is what makes your Retention Rate – the number of users who visit your app again (after installation) at least once. It is important to point out that this can only occur within a specific timeframe.
How do I calculate Retention Rate?
Retention Rate = number of people in the unit who use your app within a set period of time/number of people in that same unit who used your app within a previous period of time
Example: 200 people from your December new unit used your app in January / 1,000 users in December new user unit = your retention rate is 20%.
2. Customer Retention Rate (Churn Rate)
Churn rate is considered one of the most important Key Performance Indicator (KPI). Your application’s Customer Retention Rate is the exact percentage of customers that you have lost within a certain period. All mobile apps face this issue; therefore, it is important to track this rate regularly and try to surpass your competitors. Churn Rate is the exact opposite of retention rates.
Churn Rate can be defined as the precise rate at which your users uninstall your application or cancel subscriptions (this includes downgrading said subscriptions as well). While churn rate is considered bad, it especially becomes problematic when your most revenue-generating users churn, which can be detrimental and affect the general unit economics of your business.
A noticeable and growing Churn Rate is terrible for you and regardless of the industry, you work in. However, the most prominent problem with Customer Retention Rate is that it is quite difficult to comprehend why your users are dumping you. There can be many reasons behind this dumping which can easily range from a decrease in usability, lack of new content or even due to the multiple app crashes.
How to Calculate Churn Rate
Churn Rate = 1 – retention rate
Example: 1 – .20 = 80% Churn Rate
3. Daily and Monthly active users (DAU and MAU)
If you would like to know how many app downloads you have had and just how crucial is your app for every user who has installed it then you must utilize The Daily Active Users. This metric will tell you exactly that. Since this refers to each individual person that is using your app. Not including every session, though. However, each person is counted one time, even if they use the app once a day or hundreds of times every day.
Basically, DAU can be calculated for a specific day or present an average figure over a set timeframe. Likewise, DAU, monthly active users (MAU) tells you the distinct number of users who used your app. As the name suggests, MAU is concerned with either a particular month or the previous 30 days.
How can you calculate DAU / MAU?
This can be figured out through checking the number of your users perform a simple action on your application on a daily/monthly basis. The number you get is your DAU / MAU.
4. Cost Per Acquisition (CPA)
Initially, you might be ecstatic just to be gaining attention to your app and your app downloads shoot up. This could be due to good marketing for which you most probably spent a hefty amount on. However, at some point, you are going to have to be accountable for all of the costings you did to get those downloads. This can be considered beneficial as there is a significant cost to obtain app users. To be realistic, it would be optimal to keep Cost Per Install (CPI) relatively low and to spend as little as possible. This is a great metric to keep track of the costs acquired.
How to Measure CPA?
To measure the CPA, total your costs and divide it by acquisitions the application produced.
CPA = costs / number of acquisitions you’re tracking
5. Lifetime Value (LTV)
Lifetime value formulas will help you evaluate whether or not you are paying way too much for – or paying less which means you are getting a good deal — your users. Basically, after you acquire a customer, the next step for you should be to get this app metric. It allows you to have insight over how much value your customers will generate for you.
There are a couple of ways to approach Lifetime Value, but most of them are aimed toward evaluating out how much value – whether it is revenue or profit – you can expect from your average user during the entire time they are a loyal or customer to you. You should be interested in Lifetime Value before your marketing costs are calculated or after. Nevertheless, you must make sure that your entire time is on-board with whatever cost you have calculated.
Given factors for the equation should include how often your users make purchases, the monetary value of those purchases, and how long your customers usually remain loyal users. The most important thing here is that Lifetime Value should always be greater than Cost Per Acquisition (CPA), otherwise it will result in a major loss for you and your company.
How to Calculate LTV?
Projected LTV = the average merit of a conversion x average number of conversions in a timeframe x average customer lifetime.
Example: The average in-app purchase is $10 x the average user makes 10 purchases a year x the average customer stays with your company for 5 years = $500 LTV per user or customer.
It’s incredible if the team can figure out how ‘sticky’ a certain product is. An important consideration is knowing how often users return to the application. It is a widely used engagement metric, first popularized by Facebook.
How to Calculate Stickiness?
This can be found by dividing Daily Active Users by Monthly Active Users.
Example: Suppose you have fifty Daily Active Users and a hundred Monthly Active Users. In this case, the stickiness percentage is 50%. The average user uses or comes on the app about half time, or 15 days out of a 30-day month.
To conclude, in order to bring monetary value or the promise of monetary value to an application, you WILL have to spend a lot when it comes to time and effort. In fact, the app’s operation and maintenance should take more attention than the actual designing and building process! Since the above app metrics are basic and are related directly to user acquisition, user engagement, conversion, performance and satisfaction, implementing them seems the most obvious solution.
However, not every business is the same, so you might have to do some research on which metrics might be beneficial to the end-goal before investing time, efforts and money. Or you can let Alfabolt do all the work for you!