The smart way to increase app retention and engagement with an app analytics tool

Whatever app analytics tool you’re using (if you’re still choosing, check out our guide for choosing an app analytics tool), it’s not as much about the tool itself, but how you use it. Here, we’ll discuss how you can use app analytics tools to increase your app’s retention and engagement.

Retention

What it’s about

Retention shows how many people return on a certain day, week, or month after opening your app.

If you have good retention, you are not only keeping your users interested and engaged, you are also more likely to be able to earn money, and be successful in a competitive digital environment.

How to calculate it

To calculate retention, you need to divide the number of active users on a specific day by the number of new users on the first day they arrived, then multiply the result by 100.

Here is the formula:

Day N Retention = (Users Day N / Users Day 0) * 100

However, different types of apps have different optimal retention rates, and a 7-day retention rate is not the most suitable for every app. Below we will look at some different types of apps and what their optimal retention rate may be.

Daily retention

Daily retention is best suited for apps that users engage with on a daily basis.

• Social media apps: platforms like Facebook, Instagram, and Twitter can analyze daily retention to monitor how often users check their feeds, post content, and interact with other users.
• Messaging apps: services like WhatsApp, Telegram, or Discord might use daily retention to see how frequently users send messages, make voice or video calls, or join group chats.
• Gaming apps: games like Candy Crush, Clash of Clans, or Fortnite can benefit from daily retention analysis to understand how often users play the game, complete levels, or make in-app purchases.

Daily retention can also come in handy when trying to figure out why your users suddenly stopped using your service after a critical event, such as a data breach.

Weekly Retention

Weekly retention metrics are ideal for apps that users use multiple times per week, but not daily.

• Food delivery apps: services like Uber Eats or DoorDash might use weekly retention to see how frequently users order food or use the app for meal delivery.
• Corporate apps: tools like Slack or Microsoft Teams could benefit from weekly retention analysis to understand how often users engage with the platform for work communication.
• Fitness apps: apps like Strava or Nike Training Club can analyze weekly retention to monitor how often users track workouts and stay active throughout the week.

Monthly Retention

Monthly retention metrics suit apps that users engage with less frequently, such as once or twice a month.

• Travel apps: platforms like Airbnb or Booking.com can use monthly retention to track how often users book accommodations or plan trips.
• Finance apps: apps like Robinhood or Acorns may analyze monthly retention to see how consistently users manage investments or track expenses.
• Subscription services: platforms like Netflix or Spotify could benefit from monthly retention analysis to monitor user subscription renewals.

Monthly retention can also be helpful when you’re trying to spot trends related to seasonal changes.

Measuring retention rates is an important KPI for your app. But do you know when users will leave you? Find out with our Churn Predictions feature.

Are your numbers good?

See the table below to find out how your retention rates compare with these benchmarks.

Source: Lenny’s Newsletter.

Later in this article, we’ll give you some tips to boost the retention and engagement of your app. Also, keep in mind that if your app is new, it’s okay to have lower rates.

Engagement

What it’s about

Engagement shows how much people interact with your app. If you don’t focus on engaging users, you will end up with lower customer lifetime value (CLV or LTV) and miss out on word-of-mouth recommendations and positive reviews.

Not sure how good your LTV is? Read our article about LTV to help you find out.

Three ways to calculate it

1. Using ‘Active Users’ (nice to begin with)

This is how people usually do it. What you need to do here is divide the total time spent from all users by the number of active users.

Not sure what an active user is? Read our article about DAU, WAU, and MAU.

Here’s the formula:

Engagement rate = Total Time Spent by All Users / Number of Active Users

Where:

• Total Time Spent by All Users is the sum of the time spent in the app by all users during the specified period.
• Number of Active Users is the count of unique users who used the app during the same period.

For example, if the total time spent by all users in an app during the last month was 10,000 hours, and the number of active users during that month was 2,000, then the average time spent per user would be:

10,000 hours / 2,000 users = 5 hours

Using Active Users to measure engagement provides a big-picture view, but it can hide what is driving changes in behavior. For example, one month, you might see a spike in engagement because of a bunch of new users; another month, it could be driven by your loyal customers. This mix might give you a misleading impression of your users’ engagement. That’s why we also suggest using the methods below.

2. Using cohort analysis (medium level)

Cohort analysis is a harder but more trustworthy method for measuring your engagement. You’ll need to take two cohorts of new users who use different versions of your app and compare how they engage.

While this method is more reliable than the previous one, it might also be tricky. It’s very hard to ensure both cohorts are identical (in fact, almost impossible). Also, as they’ll come at different times, seasonal issues might impact it, too.

3. Using A/B tests (pro level)

This is the best method for measuring your engagement rate. The only downside is that it might be too costly. What you’ll need to do here is give two groups of users different versions of your product. This way, your audience will be identical, and your results will be very reliable.

How to boost retention and engagement

1. Remind users

Keep users coming back with emails, notifications, or special deals.

With AppMetrica, you can use A/B testing to try out different types of notifications in a single push campaign. This way, you can see which notification gets the best conversion results. You can test up to four ideas to see what works best for your users.

2. Improve your product

When we talk about improving a product, we’re saying we want to make it more valuable.

To do this, you can add features or benefits that make your product more useful or enjoyable for customers. For example, suppose you have a food delivery app and add a feature allowing users to track their delivery in realtime. In that case, you’re increasing the value of your app because it makes the experience more convenient and transparent for customers.

Your goal is to make hypotheses about what will benefit your users and test them in your app analytics tools. See how this approach helped Appsulove, a team of mobile game creators, decrease failures on DAU by 50%→

3. Improve the user experience

Focus on making your product more user-friendly and engaging. Here are some things you can do:

1. Reduce barriers to entry: make it easy for users to sign up and start using your product. Remove any unnecessary steps or information that might discourage users.
2. Highlight the benefits: communicate the value that your product offers. Ensure users understand how your product can solve their problems or make their lives easier.
3. Simplify the onboarding process: make it easy for users to get started with your product. Provide clear instructions and guidance to help users get up and running quickly.
4. Motivate users to explore: encourage users to discover all your product’s features and benefits. Provide rewards for completing specific tasks or achieving certain milestones.
5. Get feedback and iterate: regularly gather user feedback to improve your product. Make changes based on user feedback to ensure that your product continues to meet their needs and expectations.

4. Attract a different user segment

Consider attracting a new group of people who find your product helpful and valuable. Focusing on these new users can build their loyalty and keep them engaged with your product.

Before you go

To watch your app retention and engagement grow, you need a reliable app analytics tool like AppMetrica. Connect your app, set the metrics you want to monitor and analyze your app’s performance to grow.