Mastering

Mobile Retention
The Marketer’s Guide to Building a Practical
Retention Strategy

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 Table of Contents
Part 1: Why Retention is Essential to Growth 3

A. Calculating Retention & Churn Rates 7

B. What’s Good Retention Rate? Industry Benchmarks 7

C. Tools of the Trade: Retention Cohorts 8

Part 2: Understanding The Three Phases of User Retention 10

Phase 1: The Onboarding Stage 11

Phase 2: The Nurture Stage 13

Phase 3: The Attrition Stage 14

Part 3: Building a Practical Retention Strategy 15

The Importance of Smart Segmentation 16

Phase 1: Initial Retention: Onboarding Campaigns 17

Phase 2: Mid-Term Retention: Engagement & Conversion Campaigns 18

Phase 3: Long Term Retention: Loyalty & Referral Campaigns 19

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 Why Retention? The Problem of
Mobile App Churn
It’s tempting to look at your app’s growth metrics and see what you want to see.

A million downloads? Woohoo!

But a download is no longer a win. Installs don’t fuel your business.

The average app loses 71% of its users within just 3 months.* 23% of apps are used only once.

For your app to succeed, you can’t let these stats be your reality. Successful mobile marketers
know it’s not about acquiring users. It’s about convincing them to come back.

That’s why user retention needs to be your #1 priority.

Loyal users are the lifeblood of your app. They’re more profitable, more responsive to campaigns,
and more likely to bring in new users through word of mouth. So what’s the key to
higher retention rates?

In this guide, you’ll learn to improve app retention with marketing campaigns that:

Hook first-time users on your app

Keep engagement high by building user habits

Drive conversions at key points in your app

Target inactive and at-risk users

to prevent churn

Win back lost users

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 Part 1 :
Why Retention is Essential
to Growth
Let’s be clear: user acquisition is important. Obviously, you need to add new users each month to
grow anything. But in most cases, too much emphasis is placed on acquisition over retention —
which is a fatal mistake.

What would it look like if a mobile app was adding 10,000 new users a month?

120,000

90,000

60,000

30,000

0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov

That looks pretty solid, right?

If we’re only looking at acquisition stats like new and total active users, this graph looks great. Our
new user total is up 120% in a single year!

But there’s a problem with aggregate numbers like these: they don’t show the whole picture.

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 To get a clearer idea of how retention factors into this equation, we need to break this graph
down into cohorts (users grouped by the month they were acquired).

This is how the same graph would look with users segmented into monthly cohorts —
while maintaining the current average mobile app retention rate.

MAUs by Monthly Cohort

20000

15000

10000

5000

0
1/17 6/17 12/17

Each color represents a different user cohort. By looking at the bottom purple cohort, we can see
that 10,000 new users joined in February. But only 500 are still using the app after 3 months.

In the short-term, 67% yearly growth might appear to be a win. After all, our active user base is still
growing. The problem is, it’s not sustainable growth.

By extending this graph out another 2 years, we can see how average user retention plays out:

MAUs by Monthly Cohort

25000

20000

15000

10000

5000

0
1/17 6/17 1/18 6/18 1/19 6/19 12/19

Within two years, over 92% of new users are lost.

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 We’re maintaining our acquisition numbers to continue overall growth, sure. But that growth rate
plateaus as our churn rate catches up with us. And those 10,000 new users every month are still
just as expensive to acquire. Without solid retention, instead of our ROI increasing over time, it
decreases.

Now compare with a great growth curve:

MAUs by Monthly Cohort

80000

60000

40000

20000

0
1/17 6/17 1/18 6/18 1/19 6/19 12/19

While there’s still some churn, a significant part of each cohort stays active over time — creating a
stacking effect of steady growth.

How do these charts translate to dollars? Let’s extrapolate the poor growth curve
into a revenue curve.

MMR by Monthly Cohort

$5,000.00

$4,000.00

$3,000.00

$2,000.00

$1,000.00

$0.00
1/17 6/17 12/17

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 You might look at this chart and think, “Hey, that doesn’t look so bad.” But don’t be deceived by
short-term results. Fast forward a couple of years and see where we end up.

MMR by Monthly Cohort

$20,000.00

$15,000.00

$10,000.00

$5,000.00

$0.00
1/17 6/17 1/18 6/18 1/19 6/19 12/19

With each additional year, revenue growth drops while acquisition expenses and CPI remain the
same. Now compare to revenue with a good retention rate:

MMR by Monthly Cohort

$30,000.00

$20,000.00

$10,000.00

$0.00
1/17 6/17 1/18 6/18 1/19 6/19 12/19

With solid retention, revenue compounds with time. This is the coveted “hockey stick” curve all
businesses aspire to.

Users are like a fine wine: they get better with age. The longer you keep them, the more valuable
they are to your business. When retention is strong, so is revenue.

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 Calculating Retention & Churn Rates
When it comes to retention rates, how does your app fare?

To calculate your retention rate, compare the number of customers that remain at the end of the
time period to the number of customers that were present at the beginning of the period.

Customer Retention Rate Formula

Retention Rate = ((E-N)/S) x 100
E = Number of customers at the end of the period.
N = Number of customers acquired during the period.
S = Number of customers at the start of the period.

Retention Rate Calculator

Churn Rate Benchmarks

All apps experience some churn, even the most successful ones. So you may be asking yourself:
What’s an average churn rate? What’s normal?

Across the board, the average churn rate for all mobile apps is 71% after 90 days.*

25% Shopping
24% 23%
Entertainment
20% 21% Music
19% 19%
Travel
15% FinTech

10%
10% 10%
8% 8%

5% 6% 6%
5%
3% 3%
2%
0
Day 1 Retention Day 7 Retention Day 30 Retention

Source : AppsFlyer

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 Tools of the Trade: Retention Cohorts
Once you’ve established your app’s churn rates, you can use retention cohorts to find out where
you should focus your retention efforts.

What is cohort analysis?

Instead of looking at all your users as a whole, cohort analysis breaks them down into related
groups. You can group users any number of ways: when they installed your app, which acquisition
source they came from, and what in-app actions they take, to name a few.

By tracking and comparing cohorts you can discover your most successful acquisition channels,
uncover why users churn, and learn which in-app behaviors drive retention.

You might look at:

X Acquisition Channel
Ad (Where are your most successful users
coming from? Search, social, paid ads, referral, etc.)

PLAYLIST
Behaviors
(What actions do your most successful users take?
Create an account, build a playlist, add 5 friends, etc.)

Time
(How long does it take your most successful users
to complete key actions? An hour, a day, a week?)

Cohort data helps you discover trends and patterns, so you can pinpoint what hooks
new users on your app and keeps them coming back.

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 Cohort Analysis in Action
Say you have a food delivery app. For the past few months, new users have typically submitted an
order within the first three days of installing the app. But in week two, they’re spending less time in
the app and placing fewer orders. By the end of the first month they’ve stopped launching the app
altogether.

What’s the problem?

By breaking your user base down into cohorts, you see that most of your retained users who are
placing regular orders launch the app between 9 and 11 am. Users who don’t open the app until
after 12 pm or later either close the app within 90 seconds or abandon their cart, and 98% of these
users become inactive or uninstall within the first month.

Now you have a clearer idea of what you can do to boost engagement and conversions: get users
to launch your app before noon. Send a personalized push notification to new users between 9:30
and 10:30 am reminding them to order lunch, along with a custom recommendation or promo code.

3:30 3:30

FOOD APP 10:00 AM

X Almost lunch time! Use promo

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by noon today for 10% off and free delivery.

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 Part 2 :
Understanding The Three
Phases of User Retention
Mobile engagement starts the moment a user downloads your app. And as a mobile marketer, your
job is to understand the user journey and keep them engaged through each of the following
stages.

Phase 1: The Onboarding Stage

Which acquisition channels are your most valuable users coming from? How are these champion
users starting their customer journey? And how can you help other new users follow that same path
to success?

Phase 2: The Nurture Stage

How often do new users return to your app? What prompts them to come back? And what takes
them from simply using your app to referring it to their friends?

Phase 3: The Attrition Stage

What causes users to leave? What can you do to prevent them from churning? Your retention rate
reveals how valuable your app is to users over the long term.

REFERAL
CODE:
RIHANA210

THANKS

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 Phase 1: The Onboarding Stage

User Retention

100%

80%
% of Users retained

60%

40%

27%
20% 19%
17%
16% 15% 14% 10% 10% 10% 10%

0%
Day 0 Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10

All retention phases are important… but they’re not all equal.

At the end of the day, the initial retention phase is the most critical. If you fail in Phase 1, there’s
very little you can do in the next phases to make up for it. It’s where users get their first impression
of your app and your brand.

Ideally, you want new users to experience your app’s value as soon as possible.
But a lot can go awry.

User
downloads app

User User doesn’t bother

signs up to sign up

User plays around

User engages with a few minutes,
core features gets bored, and
leaves the app

User experiences User

“aha moment” uninstalls

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 They might download and launch the app, get annoyed by a
long onboarding process, and never come back. They might
start poking around, but never use the features that make the
app a favorite for core users. They might even use the app a
few times, but then decide it’s not worth the
device space and uninstall.

To keep users coming back, you must create an immediate,

immersive encounter with your app’s unique value.

Take MyFitnessPal, an app that helps users track calories. The

onboarding process encourages users to log a food they’ve
eaten. This gets new users to immediately experience how
easy it is to count calories with the app’s extensive database.

MyFitnessPal App

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 Phase 2: The Nurture Stage

User Retention

100%

80%
% of Users retained

60%

40%

27%
20% 19%
17%
16% 15% 14% 10% 10% 10% 10%

0%
Day 0 Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10

3:30

Too many app teams believe a successful “aha

moment” in phase 1 will automatically make phase 2
a success. But no matter how exciting a user’s first
experience with an app is, the novelty will wear off.
X

That’s why the nurture phase is all about repetition MyFitnessPal now

and building user habits. By helping users create You haven’t logged your dinner for
today. Would you like to do it now?
new habits around the app, eventually they won’t
need a reminder to use it. They’ll keep coming back
all on their own.

MyFitnessPal encourages user habits by sending

push notifications to remind users when they’ve
forgotten to log a meal.

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 Phase 3: Attrition Stage

50%

% Active (Daily) 40%

30%

20%

10%

r2
r1

3
ar
a

a
Ye

Ye

Ye
Time Since Acquisition

The first two retention phases are mostly focused on onboarding and behavioral psychology. The
final phase, however, is ultimately about listening to your users and maintaining a great product.

You can’t sit back and relax. You have to keep 3:30

refreshing users’ perception of your app as a

must have. And that means two things: mining
your data to get a meaningful understanding
of your users, and listening to their feedback
and reviews. X

If you look at any app with a history of

successful growth, you’ll find a long list of
consistent app updates. MyFitnessPal is
regularly updated twice a month. INSTALLING
UPDATES

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 Part 3 :
Building a Practical
Retention Strategy
Customer retention rate is like a check engine light for your growth machine. If that light indicates
a problem, it's time to start plotting a course of action.

A sound retention strategy is essentially built around three goals:

Phase 1:
Slash initial churn by perfecting your onboarding
and first-time user experience.

Phase 2:
Stabilize your retention curve by building user habits that keep
them engaged beyond the first few days. This is what seasoned
growth marketers refer to as “shifting the curve up.”

Phase 3:
Keep improving your app by listening to user feedback.
It’s not enough to build a best-in-class app — you need to build meaningful
relationships with your users to earn and keep their loyalty.

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 The Cure for Churn: Retention Strategies That Work
There’s no shortcut to improving user retention. Creating an effective strategy requires more than a
collection of quick tips and growth hacks. It takes planning and precision.

The Importance of User Segmentation

No matter what type of app you have, every single one of your users is unique – and each one will
react differently to your marketing campaigns. Too many apps waste valuable resources targeting
users who are unlikely to respond. Plus, blasting users with generic messaging is a
leading cause of uninstalls.

By segmenting users, mobile marketers can make the most of their campaign budgets by targeting
the right audiences. You can speak directly to those who are most likely to convert, without
wasting money on impressions or users who aren’t ready to buy. And you can personalize
marketing messages to more effectively nurture prospects down the funnel and provide a user
experience that keeps users coming back.

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 Initial Retention: Onboarding Campaigns
• Extend a Warm Welcome
Display a welcome in-app message to your new users for a personalized first-time user experience.
Reinforce the message with a welcome email within 24 hours. A good first impression
goes a long way!

• Get to The Aha Moment ASAP

Educate users about what your app offers and help them experience its benefits quickly.
What key features, content, or products do they need to know about?

• Send Gentle Reminders

Remind new users of what drew them to the app in the first place. Convenience? Savings?
Entertainment? The key is to bring them back to the app frequently and help them experience
value early and often.

• Go Omnichannel
Users will interact with your brand through a variety of digital touchpoints. Reach new users with a
mix of emails, push notifications, and in-app messages to increase your impact and maintain a
consistent user experience across channels.

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 Long-Term Retention: Loyalty & Referral Campaigns
• Promote Loyalty & Referral Programs
Paying customers are great, but repeat customers are even better. Persuade users to join your
loyalty or referral program by highlighting what they have to gain — whether it’s rewards points,
virtual currency, in-app perks, or exclusive access to premium content.

• Ask Loyal Users for Feedback

Let long-term users know you appreciate them and are working hard to keep improving their
experience with your app. Your customers want to be heard!

• Use Content Marketing Wisely

Solidify your status as your user’s go-to resource on anything and everything pertaining to your
industry. By acknowledging and providing solutions to their problems, they’ll see your brand as the
leader in your space and default to you for future purchases.

• Nurture Your User Community

Creating an active, passionate community of users who share a common interest can be a powerful
way to keep them engaged with your app.

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 Fighting Churn: Inactive & Winback Campaigns
• Use RFM Analysis to Identify and Engage Inactives
By understanding how often users launch your app, you can quickly spot dips in engagement to
draw users back in and prevent churn. RFM Analysis also helps marketers decide which win-back
strategies to implement and how to allocate resources by identifying your most valuable
customers.

• Extend a Generous Offer

Use external channels like emails and push notifications to send inactive users a significant
discount or offer to tempt them back. Discounts, deals, and bonus offers are the top reason users
return to an app after uninstalling.

• Highlight Significant Updates

Tell inactive or churned users how you’ve improved the app since they last launched. What
features, products, or content have you added? Which bugs have you fixed? How have you listened
to their feedback and improved the user experience?

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 A Smarter Way to Boost Retention
Can you fix a high churn rate? Absolutely. But only with a strategy based on the right data.
By using data to understand why users leave, you can optimize your app’s user experience and get
more users to count your app in their list of favorites.

CleverTap’s intelligent retention marketing platform helps you:

Analyze
See exactly what users are doing in your
app and which behaviors lead to success

Engage
Send automated, targeted messages to
one or millions of users for a personalized
app experience

Segment
Automatically group users based on
behavior, location, lifecycle
stage, and more.

Optimize
Test, measure, and improve your
mobile marketing campaigns to
boost ROI and revenue.

Want expert help engaging and retaining more of your mobile app users?

Schedule a personalized call with our mobile growth experts today.

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 Convert, Retain, and Grow Your Mobile Users
User retention is more than just getting repeat app launches. It’s
about building loyal relationships that drive sustainable business growth.

CleverTap’s retention marketing platform gives you all the

customer experience optimization toolsyou need for
effective engagement at every point in the customer lifecycle.

Chat with one of our mobile growth experts to learn more

TALK WITH US

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