Redefining the Relationship Between Retention and Engagement

employees increasing retention and engagement

As the mobile industry shifts from prioritising acquisition to valuing sustainable growth through user retention and engagement strategies, many people are left questioning which growth metrics will be most effective for their business when it comes to measuring success for their apps. A lot can be gained by creating a clear definition for both retention and engagement and, more importantly, understanding how they are inherently connected. Together, they can be used to drive the overall success of your marketing efforts.

What is user retention?

User retention is defined as the ongoing use of a product by a user. Retention metrics are subsequently used to understand the number of users who remain ‘active’, which can be as simple as continuing to open the mobile app. This not only helps to identify how many users continue to open your app, but also the amount of users who do not. Marketers normally use retention metrics to counteract the possibility of user churn. 

Retention affects the majority of metrics that are being tracked, as high retention reveals that users have a real and regular need for a product. Measuring user retention can also help provide a more granular insight of your audience, such as the time of the day that they are most likely to interact with an app. The majority of insights gained through retention metrics are used:

  • To put forward strategies that prevent the high possibility of users churning
  • In combination with additional metrics to identify the number of actively engaged users

Did you know only 55% of individuals who use an app in the first week after download will be retained?

What is user engagement?

User engagement measures whether users find value in a product. Engagement is usually measured through a combination of activities, for example completing a purchase or sharing the app. User engagement often encompasses retention, along with referrals and revenue. Thus, user engagement pushes the activation of users and goal conversion, which ultimately increases ROI and indicates business growth.

New customers who engage with an app every week for the first month after download have the highest levels of retention, with 90% of them showing additional activity over the next three months.

How do you measure retention?

The retention metrics that are most commonly focused on are Daily Active Users (DAUs) or Monthly Active Users (MAUs). With these metrics, a business can get a better sense of the users that are regularly interacting with their app, which can be more insightful than vanity metrics like total installs. However, when it comes to apps where the model does not seek to increase daily active users, metrics that focus on Return on Investment (ROI) or Average Revenue Per User (ARPU) often reveal themselves to be more valuable. The aim of dating apps, for example, is to create relationships between users, and a churned user is actually an indication of a successful user experience.

dating app lifecycle

To find out more about the growth metrics that should play a key part in influencing business decisions read this article.

How do you measure engagement?

A lot can be gained by bringing retention into the engagement discussion. It is key to know not only whether people come back to your product, but why they are coming back. To find out why users are either staying or churning out, it is necessary to do the following:

  • Isolate the specific behaviors individual users take and see how these affect the retention rate over time
  • Look at all the new users who have performed a specific action, or set of actions
  • Correlate this data with your retention statistics

To understand user engagement, it is crucial to identify the features that bring users back to your product time and time again.

Every company’s definition of user engagement will differ, as it is always dependent on the business model. A user spending four hours in a social media app, for example, would be viewed positively. Whereas the same amount of time spent within a banking app may suggest the user is having trouble tracking their expenditure or making a payment.

It is also important to define and track negative actions, such as unsubscribes and silenced notifications. If the events that cause users to become disengaged are identified, this knowledge can be used to make relevant improvements to the product.

The shift to subscription and the increasing importance of user engagement

The increase in subscription services has meant that profit growth now relies more heavily on users continuing to find value in the app, long-term. This shift also requires businesses to measure Lifetime Value (LTV) more closely in order to better define the engagement rate.

As a result of this, measuring the churn rate has become equally important, as it reveals which users feel the app lacks value. Using mobile first tools, it is possible to go a step further and break this down to see where users are churning within the app. This can help outline common pain points or areas of the app that lack clarity, as well as the areas of the app that are doing particularly well and have the potential to be expanded.

Why are they essential for growth?

In today’s environment user attention is a finite resource which has a tendency to be short-lived.

Retaining loyal users is critical to app success as not only will you be saving on Cost Per Customer Acquisition but your users will also spend more time in your app, creating higher revenue generation as a result. Measuring retention will also warn you if your app starts losing momentum in its current iteration. The more your user engagement increases the higher your overall profitability will also become.

If users choose to spend their time on a particular app or site, they’re signaling that they find value in it. This allows businesses to make money from the product or service with ads, subscriptions, or sales. Highly engaged users, after all, are the most likely to buy the product or service as well as becoming advocates for it, by recommending it and sharing it with their network. By understanding the relationship between user retention and engagement, it is possible to unlock the full potential of these metrics and increase growth exponentially.

This graph highlights the impact retention and engagement have on each other at the simplest level:

engagement and retention correlation graph

How Yodel Mobile Can Help

It is evident that never before has it been more important for app success that a holistic and integrated app marketing strategy is implemented using tailored growth metrics to extract crucial insights that will boost sustainable growth.

Make sure to sign up to our newsletter to get notified when we release a new blog post. Want to find out more about optimising your app and keeping up with the latest OS capabilities? Make sure to subscribe to our Mastering Mobile Marketing video series. You can also get in touch by visiting the Contact Us page. Follow us on LinkedIn, chat with us on Twitter @yodelmobile, and join our #AppMarketingUK LinkedIn group.

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Smokehouse Yard, 44-46, St John Street, London, EC1M 4DF 🇬🇧