In Part 1, we explored the key acquisition and activation metrics that help measure how users discover and engage with your app in its early stages. However, acquiring users is just the beginning as ensuring they stay engaged, generate revenue, and help drive organic growth is what truly defines long-term success.
In Part 2, we will dive into 6 essential app engagement metrics focused on retention, monetisation, and virality, helping you build a sustainable and scalable app growth strategy.
App Engagement & Engagement metrics
6. Retention Rate (Day 1/7/30)
Prioritising retention is nothing new, but it is becoming increasingly important to understand how much users value your app. Retention is one of the most important app growth metrics because it directly impacts user engagement, monetisation, and long-term success.
Retention rate helps you measure whether the users you acquire stick around and how much value they get from your product or offering.
Breaking retention rate down by acquisition channels or messages, as well as monitoring trends that highlight churn or engagement, provides you with insight into the effectiveness of your app’s messaging, onboarding, and UX.
It is important to define a timeframe for retention that makes sense for your business, such as analysing 1-day, 7-day, 30-day or even 1-year retention. To calculate the retention rate for day 7, for example, you’d use the following formula:
When measuring retention rate, consider unbounded retention, which tracks users who return at any point rather than on a fixed day. Unlike bounded retention, which looks at specific time intervals (e.g, Day 1, Day 7, Day 30), unbounded retention allows for a broader understanding of loyalty over time.
7. Churn Rate
Churn rate is a crucial growth metric, measuring the percentage of users who stop using an app over a specific period. Keeping churn rate low is essential for sustained growth.
For example, if an app starts the month with 10,000 active users and loses 2,000 by the end of the month, the churn rate would be 20%.
A high churn rate indicates that users are not finding enough value in the app to stay engaged. Strategies to reduce churn includes improving onboarding, re-engaging users through personalised messaging, and introducing loyalty programs.
If you want to learn more about churn and how to fight it, check out our Combating User Churn report.
8. DAU / MAU + Stickiness Ratio
The DAU/MAU ratio measures how frequently users engage with an app over a given period. It is a crucial metric as it helps apps forecast retention and monetisation – central to the success of many apps.
It is calculated by dividing Daily Active Users (DAU) by Monthly Active Users (MAU) and is expressed as a percentage:
A DAU/MAU ratio above 20% is generally considered engaging, while top-performing apps like social media platforms often exceed 50%.
Another way to measure the engagement is stickiness, how frequently users return to the app. While retention rate tracks users over set timeframes, stickiness reflects the natural tendency of users to come back, independent of external-reengagement efforts.
Not all apps are meant for daily use (e.g., a hotel booking app), so it is important to define what an ‘active user’ means for your app. Understanding stickiness will give you better insights into your app’s user experience and engagement strategies.
Monetisation metrics
9. Lifetime Value (LTV)
LTV estimates the total revenue a user generates throughout their relationship with an app.
LTV helps determine the value users bring to your company and informs how much you should be spending to acquire them. The key factors in LTV calculation include transaction frequency, transaction value, and customer lifespan (taking into account both churn and loyal users).
For a sustainable business, your LTV should be greater than your Cost Per Acquisition (CPA), ideally at a 3:1 ratio.
10. Average Revenue Per User (ARPU)
ARPU measures the average income generated by each active app user over a specific period.
Like Lifetime Value (LTV), ARPU helps assess user worth, especially within defined segments and cohorts. It’s a key app growth metric for app marketers to understand user profitability within a set timeframe.
For example, if an app generates $50,000 in revenue in one month and has 10,000 active users, the ARPU would be $5 per user per month. A metric closely associated with ARPU is Average Revenue Per Paying User (ARPPU), Which focuses only on users who make a purchase. The distinction is particularly important for freemium models, where ARPPU should be considerably higher than ARPU.
For apps that generate revenue primarily through ads (e.g., hyper-casual games), ARPU and ARPPU are expected to be more comparable.
Virality metrics
11. Viral Coefficient
The Viral Coefficient measures the number of referrals a user makes that successfully convert into users.
Not every app will benefit from using this metric, however it does provide a good indication as to how many users have become advocates for your app and how these plays into your organic acquisition strategy.
Where Conversion Rate of invites is the percentage of invited users who sign up for the app.
A Viral Coefficient greater than 1 means your app is growing organically, as each user is bringing in one new user.
To increase virality, incorporate social sharing features, referral incentive techniques that showcase the benefits of users sharing your app and make it easy for them to do so. By increasing your Viral Coefficient, you’ll be able to reduce reliance on paid acquisition channels and grow your app organically.
Final thoughts
Retention, monetisation, and virality metrics are essential for long-term app success. While acquisition and activation bring users in, these metrics ensure they stay, generate revenue and continue to fuel organic growth.
Integrating just a few of these app growth metrics into your strategy you can quickly transform how you analyse data, giving you a more accurate picture of user engagement and satisfaction.
Want to take your app growth strategy to the next level? Yodel Mobile’s team of experts specialise in helping apps optimise performance, drive retention and scale. Get in touch today to see how we can help.
