What are App Growth Metrics?
App growth metrics are performance indicators which provide insight into the full app lifecycle. This includes how users interact with the app and points in the user journey that have high engagement or churn rates.
Most of the growth metrics we use to analyse mobile apps and their users stay consistent over time and for good reason: they work. However, as we continue to get a more comprehensive understanding of how mobile consumers behave and engage with apps we can also track and analyse data more intelligently. This means starting to incorporate more advanced growth metrics into our app marketing strategies. Here are the 10 app growth metrics that you should consider.
Top 10 Growth Metrics
1. Retention Rate
Prioritising retention is not a new concept, however it is increasingly important when it comes to understanding your users and how much they value your app. The retention rate allows you to understand whether the users you acquire stick around and how much value they get from your product. Breaking retention rate down by acquisition channels or messages, as well as monitoring for any trends that highlight churn or engagement, gives you insight into the effectiveness of your app’s messaging, onboarding and UX.
Retention rate = (# Users on day 7 / # Users on day 1) * 100
It is important to define a timeframe for retention that makes sense for your business, for instance analysing 7-day, 30-day or even 1-year retention.
There are a few different ways of measuring retention that should also be considered:
N Day Retention
N Day Retention calculates the percentage of users who come back within a specific time frame. For example, Day 7 Retention is the percentage of users who come back and engage with the app on day 7. N day retention is useful if an app relies on users engaging with the app in each and every time unit, or alternatively, if you want to get a better look at high-level usage patterns.
Unbounded Retention will tell you how many users used your app and then ever returned to find more value. It identifies how many users come back to the app at a specific time (day, week, month) or at any point after this time. Unbounded Retention gives you a better sense of how long you are holding on to your users.
2. Session Depth
A session is the time during which a user performs actions in your app. Session depth goes one step further to analyse how many interactions a user has in your app in one session.
Depending on the purpose of your app, a low session depth could be a good or a bad thing. A banking app with a high session depth may indicate that the user is struggling to complete a task, whereas a social media app with a low session depth may mean your users are quick to stop engaging with your app.
Stickiness is a metric used to determine engagement by analysing how often people come back to your app. This is measured by dividing Daily Active Users (DAU) by Monthly Active Users (MAU) to get a percentage. The higher this percentage, the more often your users are returning to your app. The closer your DAU count is to your MAU count, the higher the engagement is for your app and the more frequently your MAUs are using the app.
Stickiness = DAU / MAU
However, not all apps are meant to be used daily, so you’ll need to define exactly what an ‘active user’ means for your app. By determining stickiness, you will get a better understanding of the effectiveness of your engagement campaigns and your user experience.
Additionally, stickiness is not the same as engagement, which measures a deeper level of commitment to the product. Engagement takes into consideration the number of key actions taken by a user, looking at both the frequency and sequence of actions taken. Engagement metrics are unique to each business, as the ‘key actions’ numerator and denominator should depend on the product and its core metrics. For example, a streaming app may focus on minutes of video watched whilst a retail app focuses on the number of transactions completed. In order to measure the depth of engagement per user with your product you should then divide this by your active user count.
Engagement = # of key actions taken / active users
4. Cost Per Acquisition (CPA)
It is no secret that acquiring app users often comes at a significant cost. CPA is also not a new metric, however there are more advanced and accurate ways of measuring CPA that take the full app lifecycle into consideration. Traditionally, to measure the CPA of a campaign, you need to total your cost for that campaign and divide it by the conversions or acquisitions the campaign produced.
CPA = total cost of campaign / total # of users acquired
When measuring CPA now, you should also take organic growth into consideration. If you acquire one user through a paid advertisement and that user, after having engaged with your app, goes on to share your app with two friends, that same CPA is actually responsible for bringing three new users to your app. This lowers your overall CPA in the long-term and is a more accurate reflection of how organic and paid marketing strategies play into each other.
5. Viral Coefficient
Similarly, the viral coefficient analyses 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 this plays into your organic acquisition strategy. You can measure viral coefficient using the following formula:
Viral coefficient = (social shares by each new user) * (conversion rate from impression to install)
You should look to sustainably increase your viral coefficient over time through incorporating social sharing techniques that showcase the benefits of users sharing your app and make it easy for them to do so.
6. Customer Acquisition Cost-to-Conversion Rate
The Customer Acquisition Cost (also known as Cost Per Acquisition) measures the cost of acquiring a new customer. CAC-to-Conversion rate goes a little further and measures the cost of acquiring a paying customer. Many apps more commonly measure CAC-install – which analyses how much it costs to acquire a user who installs the app – however this is highly controlled by marketplaces, such as Facebook and Google. The CAC-Conversion rate is often more substantial as only a percentage of users will actually register and then convert. This gives you more control over increasing conversion rates within the app.
CAC-Conversion rate = (total # of users acquired / total # of users who performed action) * CPA
It is more expensive to convert a new user than it is to nurture and engage existing customers so this could provide huge savings. Additionally, big deltas in CAC-to-Conversion rate can highlight opportunities for product improvement, such as fixing bugs in onboarding, or optimisations for your campaigns, for instance correcting misleading messaging that is bringing in the wrong users. Focusing on conversion rates thus lowers your overall CAC. More importantly, conversion does not stop once a user installs your app. You can continue to upsell and encourage your users to make repeat purchases and renew subscriptions.
7. Lifetime Value (LTV)
Lifetime Value (LTV) is a metric that has become increasingly important over the last year. LTV helps you determine the value users bring to your company and thus also helps to establish whether you are paying the correct amount to acquire them. Some factors that need to be included in the equation are; how often your users make transactions, the monetary value of those transactions, and how long your customers remain customers on average (this should take into account both user churn and loyal users). In order for your business to be viable your LTV should be greater than your Cost Per Acquisition (CPA), with the ideal ratio being 3:1.
LTV = average value of a conversion * average # of conversions in a time frame * average customer lifetime
8. Average Revenue Per User (ARPU) and Average Revenue Per Paying User (ARPPU)
You can also calculate the current LTV your app has achieved since launch. This can be done by dividing the total revenue of your app by the number of users you have had in a specific timeframe – this is also called ARPU. You can drill down further by also calculating the impact paid users have on revenue by using the formula for ARPPU below:
ARPU = revenue / # of users
ARPPU = revenue / # of paying users
9. Net Promoter Score (NPS)
The Net Promoter Score measures the willingness of users to recommend your app to others. NPS is slightly different to other metrics as it is used as a proxy for gauging the user’s overall satisfaction with your app as well as the user’s loyalty to your brand, as opposed to their perception of a singular interaction. Your Net Promoter Score is simply the percentage of happy, loyal users minus the percentage of unhappy users.
NPS = # Promoters – # Detractors
To measure NPS you can survey your customers with a simple question: “How likely are you to recommend us to a friend or colleague?”
10. IDFA opt-in
With Apple announcing last year that it would be deprecating the Identifier for Advertisers (IDFA), it became increasingly important for app businesses to map out how they were going to encourage users to opt-in to IDFA. Apple’s bid to increase user privacy has meant that apps will now have a limited window where they will be able to ask users to opt-in to providing their data.
IDFA opt-in rate = # of users opted-in to IDFA / total # of users
By measuring how many users have opted-in to sharing data you will be able to get a better sense of how many users were convinced that sharing their data with your app adds value as well as how many users are open to engaging with your app.
Using App Growth Metrics to Support your App Marketing Strategy
By incorporating just a few of these app growth metrics into your app marketing strategy you can quickly transform the way you look at and analyse data, enabling you to get a more accurate picture of user engagement and satisfaction. By integrating an analytics tool, such as Mixpanel (watch a quick demo of Mixpanel here), it will be easy to view, track and gain insight from a myriad of different growth metrics which should underpin your app marketing strategy and dramatically increase your chances of long-term sustainable growth.
Incorporating more advanced growth metrics should also make visible the clear relationship between many of these growth metrics and how they impact each other. By using these metrics to create a sustainable app growth strategy, you will be able to evaluate the business and identify mechanisms which will drive ongoing growth. At Yodel Mobile, we also seek to identify loops which will work together to create the growth engine, as well as utilising different levers and strategies that we can leverage within each growth loop.
Mixpanel helps companies build better products through data. With our powerful, self-serve product analytics solution, teams can easily analyse how and why people engage, convert, and retain to improve their user experience.
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