What Is User Retention?
User retention is the name given to the ability of a company or product to retain its customers over a period of time. It is a critical metric for businesses as it measures the loyalty of the customer base and the effectiveness of the company's engagement strategies.
High user retention rates indicate that a product or service is valuable to its users, encouraging them to continue using it rather than switching to a competitor.
Why Is User Retention Important?
User retention is important because it helps businesses maintain a steady customer base, reduce acquisition costs, and increase revenue. When customers return to a business repeatedly, it shows that they are satisfied with the product or service and are likely to recommend it to others.
Retaining customers is also more cost-effective than acquiring new ones, as it requires less marketing and sales efforts. Specifically, the cost of acquiring a new user can be as much as five times higher than the cost of retention.
Additionally, loyal customers tend to spend more and are more willing to try new offerings from the business. Therefore, focusing on user retention is crucial for the long-term success and growth of a business.
What Drives User Retention?
Below, we explore key drivers that play a significant role in keeping users engaged and loyal.
Personalized Experience
Personalization is a powerful tool for increasing user retention. Tailoring the user experience to meet individual preferences and needs can make users feel valued and understood. This can include personalized content, recommendations, or user interfaces. By leveraging data analytics and user feedback, companies can create a more engaging and relevant experience for each user, encouraging them to return.
Quality and Reliability
The core quality and reliability of a product or service are fundamental to user retention. Users expect a seamless, bug-free experience that delivers on its promised value. Regular updates, fixing bugs promptly, and ensuring high performance can significantly reduce user churn. Quality also extends to customer service; responsive and helpful support can salvage potentially negative experiences and retain users.
Regular Updates and Improvements
Continuous improvement based on user feedback and market trends keeps a product relevant and engaging. Introducing new features, content, or optimizations shows a commitment to the product and its users. This not only enhances the user experience but also keeps users curious and engaged with what's coming next.
Community Building
Creating a sense of community around a product or service can significantly boost user retention. When users feel part of a community, they are more likely to remain engaged and loyal. Community can be fostered through social features within the product, forums, social media, or events. Engaging with the community and incorporating their feedback into product development can also strengthen the relationship between users and the product.
Rewards and Incentives
Incentivizing users to return through rewards, loyalty programs, or gamification can effectively boost retention. These incentives can motivate users to engage with the product regularly. Rewards could be in the form of discounts, exclusive content, badges, or progress tracking, which adds an element of achievement and recognition to the user experience.
Ease of Use
A user-friendly interface and intuitive design are crucial for retaining users. The easier it is for users to navigate and achieve their goals within the product, the more likely they are to continue using it. This includes clear calls to action, minimizing friction points, and ensuring accessibility for all users.
Emotional Connection
Creating an emotional bond with users can lead to higher retention rates. This can be achieved through branding, storytelling, and user experiences that evoke positive emotions. When users feel an emotional connection to a product, they are more likely to remain loyal and advocate for it to others.
Value Proposition
Finally, a clear and compelling value proposition is essential for user retention. Users need to understand the benefits of using the product and how it solves their problems or meets their needs. A strong value proposition, communicated effectively through marketing and user experience, helps users see the ongoing value of the product, encouraging long-term engagement.
In conclusion, user retention is a multifaceted challenge that requires attention to detail, a deep understanding of user needs, and a commitment to continuous improvement. By focusing on these key areas, companies can enhance their user retention strategies and build a loyal, engaged user base.
What’s The Difference Between User Retention And Customer Retention?
User retention focuses on keeping users engaged with a product or service over time, often in digital or app-based contexts, whereas customer retention emphasizes maintaining a relationship with paying customers, typically in broader business settings, to encourage repeat purchases or continued subscription.
User Retention
User retention typically pertains to the digital or online sector, focusing on the ability of a software, application, or online service to keep its users engaged over time. It measures how effectively a product or platform maintains its active user base. User retention is crucial for businesses whose success relies on the consistent engagement of users with the product, such as mobile apps, software as a service (SaaS) platforms, and online games. The strategies to improve user retention often involve enhancing the user experience, adding new features, and ensuring the product meets the evolving needs of its user base.
Customer Retention
Customer retention, on the other hand, applies to a broader range of industries and is a concept used long before the digital age. It refers to the ability of a company to retain its customers over a specific period. This encompasses not just digital products but also physical goods and traditional services. Customer retention strategies can include loyalty programs, customer service excellence, product quality improvements, and personalized marketing efforts. The focus here is on maintaining a relationship with the customer that encourages repeat business, regardless of the platform or medium through which the product or service is delivered.
Key Differences
- Scope: User retention is often specific to digital users and focuses on keeping them engaged with an app or platform, whereas customer retention is broader, encompassing any ongoing customer relationship, including those in traditional retail or services industries.
- Strategies: Strategies for improving user retention are typically centered around product features, usability, and digital engagement tactics. In contrast, customer retention strategies may include a wider range of tactics, such as loyalty programs, customer service improvements, and quality enhancements.
- Measurement: While both are measured over time, the metrics for user retention might include daily active users (DAU) or monthly active users (MAU), session length, and engagement rates. Customer retention, however, might be measured by repeat purchase rates, customer lifetime value (CLV), and churn rate.
What Is User Churn?
User churn is a metric that measures the number of people who stop engaging with an app or another product after initial use. This could include users who have simply ceased to use the app or removed it from their devices.
If your app is experiencing a high churn rate, you may need to take certain steps to improve the user experience or marketing to keep users engaged. Otherwise, you may be spending too much on user acquisition when you need to focus more on retaining users.
What's the Difference Between User Retention Rates and Churn Rates?
The main difference between these two metrics is that while retention rate measures the number of users who keep using your app, churn rate indicates the number of users who drop off and stop using the app.
Both of these metrics are inversely proportional to each other. For instance, if you see that you have a high retention rate, you'll see a low churn rate. On the other hand, if you see a low retention rate, you'll probably see a high churn rate. Looking at one or the other will give you an idea of the complementary metric.
How to Measure User Retention
If you want to measure your app's user retention rate, you can do so by taking the following steps:
- Calculate the total number of customers you've gained at the end of a specific period, such as a week, month, or year.
- Take this total and subtract from it the total amount of new acquisitions gained within that period.
- Divide this new number by the total number of customers you started with before the measurement period began.
- Multiply this sum by 100.
To put it another way, you can use this formula:
Total number of customers at the end of the measurement period - Total number of new acquisitions taking place over the measurement period / Total number of customers at the beginning of the measurement period x 100 = Retention rate (%)
The final number will give you a specific percentage you can use to gauge your overall retention rate.
What Is an Average Good User Retention?
There isn't a universally defined "good" user retention, but the higher, the better. The average retention rate for the majority of apps is around six to 20% over eight weeks. You can use this as a benchmark to determine what your ideal retention rate is in your industry.
Keep in mind that the user retention rate will also depend on the device. You may find that your user retention differs between Android and iOS devices.
You can decide on a good user retention rate based on what you're spending on your app and the kind of ROI you see compared to your goals. If you notice that you're not making enough from repeat purchases and subscriptions despite high acquisition rates, you should work on improving your user retention rate. Thankfully, there are plenty of ways to increase your user retention rate.
How to Increase User Retention
If your goal is to boost user retention, there are many ways to do so with the right strategies. Some of the best methods for retaining users and providing users with the ideal experience involve:
Use Engaging Stories
A unique way to connect with new and existing users is to implement Stories, including App Stories and Web Stories. These enable you to create full-screen messages and visuals that go beyond basic push notifications and in-app messages.
You can use Stories to make personalized recommendations, conduct polls, and surveys, learn about users' interests, and more. App Stories can connect with users within your app with a mobile-optimized experience, while Web Stories can reach users on your website.
These Stories can ultimately be a reliable method for regularly engaging users and keeping them coming back to your app.
Understanding Your Users
To increase user retention, it's crucial to first understand who your users are, what they need, and what motivates them to continue using your product. Collecting and analyzing user feedback, conducting surveys, and monitoring user behavior through analytics can provide valuable insights into user preferences and pain points.
Enhancing User Experience (UX)
Improving the overall user experience is fundamental. This involves designing intuitive interfaces, ensuring fast and reliable performance, and providing clear value from the first use. Simplifying onboarding processes can help new users quickly find value in your product, increasing the likelihood they will stick around.
Providing Quality Content and Features
Regularly updating your product with high-quality content and new features keeps the user experience fresh and engaging. Listening to user feedback for desired improvements or additional features can guide these updates effectively.
Personalization
Personalizing the user experience can significantly boost retention. Use data analytics to tailor the user experience, content, and recommendations to individual preferences and behaviors. This approach makes users feel understood and valued, encouraging continued engagement.
Building a Community
Fostering a sense of community around your product can enhance user loyalty. Implementing forums, user groups, or social features where users can share experiences and tips can create a more engaging and sticky user experience.
Offering Exceptional Customer Support
Providing timely, helpful customer support is critical. Users are more likely to remain loyal if they feel supported and valued, especially when issues arise. This includes having a responsive support team and offering help resources like tutorials, FAQs, and user guides.
Implementing a Feedback Loop
Creating a system for collecting, analyzing, and acting on user feedback shows users that their opinions matter and can lead to improvements that increase user satisfaction and retention. This can be achieved through surveys, user testing, and monitoring feedback channels.
Rewarding Loyalty
Implementing loyalty or reward programs can incentivize continued use. Rewards for milestones, referrals, or continued engagement can make users feel appreciated and encourage them to stick with your product.
Leveraging Push Notifications and Email Marketing
Carefully timed and relevant push notifications or email communications can remind users to engage with your product without being intrusive. These messages can highlight new features, content, or promotions that bring users back into the app or service.
Monitoring and Analyzing User Retention Metrics
Regularly monitoring key performance indicators (KPIs) related to user retention, such as churn rate, daily/monthly active users, session length, and engagement rate, can help you understand how well your retention strategies are working and where there's room for improvement.
Implementing these strategies requires a balance between enhancing the user experience, adding value, and maintaining a genuine connection with your user base. Continuous improvement and adaptation to user feedback and changing market trends are key to sustaining high user retention rates.
Give User Retention Efforts the Focus They Need
If you want your app to truly succeed, you must give ample attention to user retention. If people regularly engage with your app, they'll be more inclined to remain loyal and, subsequently, increase your app's revenue.
One of the best tools to use to increase user retention is Storyly, which allows you to use Stories to reach users within your app and on your website. To get started with Stories, learn more about our tool's capabilities today.
