January 27, 2016

Retention Marketing: How to Awaken Your Dormant Users

Retention MarketingUntil recently, the bulk of mobile app marketing concentrated on amassing new users. The user acquisition funnel consisted of the following: thousands of users see an ad, many of them install your app, and just as many stop using it after the first few days. In the end, there are a number of users who stuck till the point of generating revenue. Although this CPI model wasn’t too consistent or well-calculated, it managed to work the majority of the time.

However, as the mobile industry continues to change, so have the strategies to gain loyal users.

User acquisition has shifted its focus to retaining existing users, as opposed to simply generating downloads. As the mobile market gets increasingly saturated, app owners can no longer ignore the importance of retention marketing in ensuring they build a sustainable user base for their mobile app.

Here’s why:

– App stores are getting increasingly saturated. Apple’s App Store started off with just 500 apps in 2009, and six years later, there are more than 1.5 million apps available.  

– The cost of acquiring a new user increases every year on both iOS and Android platforms. Based on Fiksu’s November 2015 indexes below, the average CPI for iOS is $1.54, which marks a 40% annual increase. For Android, the CPI is $2.27, which is 101% higher than last year.

Fiksu CPI Index

– Users have dozens of apps installed on their smartphones, yet use only a few of them. A Pew Research Center report shows that 46% of users utilize only 1-5 apps per week, whereas only 35% use 6 to 10.

– Most apps are abandoned by users after being used 3-4 times.

The Shift to Retention Marketing:

User Acquisition is a starting point for every mobile app. If done correctly, it is intended to effectively draw in new users and create an active user base. While it’s important to spend some of your budget on UA in order to build your app’s initial user base, this activity should be accompanied by a long-term retention marketing plan.

Retention marketing is a safety net that keeps in users who just happened to leave your app for one reason or another. Retention helps activate otherwise dormant users, by reaching out and reminding them of the product they were at some point interested enough to install. Below is a prime example of People Tree App utilizing the tools of retention marketing, with a banner retargeting a user. The banner shows an image of the exact dress the user has previously browsed in an effort to lead them directly back to the app page where that item can be purchased.

People Tree App

How to Use Retention Marketing:

There are several retention marketing strategies, techniques and media channels an app owner can use. The choice depends greatly on your app’s category and the type of services it offers. Below are the most common principles of retention marketing:

1. Start from the get-go: Retention begins with onboarding and should start right away, as an average app loses as much as 80% of users in the first 3 days post-install. This is the ugly truth: by not describing their features properly to a new user, most apps ignore the importance of a diligent onboarding process. If your user does not understand how to use your app, he or she will leave shortly thereafter. A thought-out registration and onboarding process for new users is a much more effective, and easily established, practice of retention than launching an email campaign the following week.

For example, Flipboard offers an engaging onboarding process that starts before a user signs up. A new user chooses their theme preferences and immediately gets a general idea of how to use the app, stimulating a trusting and loyal relationship with the brand:

Flipboard

2. Know your audience: Retention won’t work without a vast knowledge base on user behavior, so the sooner you gather all the data you need, the better. Don’t hesitate to install a good in-app analytics tool such as Flurry Analytics or Localytics to help you track metrics such as number of sessions and session lengths, buttons clicked, time spent on page, and more demographic and technical data. This data creates a detailed picture of how users interact with content and behave inside your app and, more importantly, where in your app users are less engaged, helping you gain insight into why they abandon your app and how to reactivate them.  

3. Keep it brief: when it comes to retaining existing users, your content should be as simple and as brief as possible. Keep your message clear and to the point. Below are some options of media channels to choose from when reaching out to your dormant users:

     – Email Marketing: While often the most low-cost method, it’s not the fastest one, and would be more appropriate to use in a long-term retention strategy.

      – Push Notifications: Limited in content length and quantity, these can still be very effective for immediate messages that then deep-link to a specific page in your app (for example, a push notification for a ‘Sale’ announcement that will open to your app’s ‘discounted items’ page)

   – In-App Messaging: These can be seen as a part of an app’s onboarding process and are a great re-engagement tool for people already using your app. According to Localytics, apps that utilize in-app messages increase user retention in 2-3.5 times.

     Retargeting Ads: Constitute the least intrusive way to reach users. Works best for users who have recently shown interest in your app (such as, for example, filling a shopping cart without checking out and making an in-app purchase).

The Vital Benefits of Retention Marketing:

1. You gain insight into your users’ in-app behavior: App retention marketing helps measure how valuable your app is to your users. They have installed it, which is a clear sign that they are interested. But what next? How many of them return? Which functions or parts of the app engage users, and which seem to deter them from engaging with or visiting your app again? Monitoring user behavior through in-app analytics is essential for a successful retention strategy, which will provide unique insight into how users view your app and what needs to be enhanced or adjusted.

2. You save on budget: Did you know it costs 7 times more to acquire a new user than to retain an existing one? Retention marketing is a cost-saving opportunity. Data-driven remarketing ads have much higher conversion rates than regular ads, plus they boost in-app revenue. According to Kelsey Ricard from Taplytics, existing users spend 33% more than new ones.

3. You build a loyal user base: Retention marketing concentrates on turning users into loyal customers. Take the gaming industry, for example, where every gaming app is looking for the highest-paying users. Utilizing retention marketing  through the use of demographic and behavioral targeting can help determine your app’s most relevant audience segment and nurture your most loyal users.

Retention Marketing FeatureEven though retention marketing is relatively new in the mobile app ecosystem, it has proven to be an effective strategy for growing an app’s user base long-term. According to an Appboy study, apps that ran re-engagement campaigns with push notifications and emails or in-app messages during the seven day post-install period saw user retention increase 130% over the month.

You can expect to see retention marketing become a driving force in the mobile app industry moving forward. Data shows that of last year’s total global growth in mobile app usage, an impressive 40% came from existing users, a jump from the 20% in 2014 and 10% in 2013. More and more apps across all categories have come to rely on retention marketing in order to succeed. While this marketing approach demands extensive planning, UX expertise, data analysis, and effective UA budget management, these efforts pay off in the long run – creating a durable base of loyal and engaged users.

Guest Post by: Eugine Dychko, Content Manager at GoWide, a global mobile app marketing platform with mobile traffic solutions for app owners, developers, affiliate marketers and advertising agencies.

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