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Long-lasting relationships, Why User Retention Matters for Mobile

Posted by Hugh Reynolds on March 4th, 2014 at 8:00 am

We know mobile has arrived. For a number of years now, consumers have been spending more time on mobile and tablet applications than on the internet, each year bringing continued expansion to the mobile app ecosystem. According to Gartner, mobile app store downloads worldwide increased from about 64 billion in 2012, to over 102 billion in 2013 - a 64% increase. Revenue from those downloads was 18 billion in 2012 and is expected to have totaled $26 billion in 2013. By 2017, Gartner projects we’ll be at 268 billion downloads a year and $77 billion in revenue.

That’s the good news. However, there is immense room for growth to make the most of this opportunity and some attitudes will have to change about what indicates success in mobile. The single biggest mistake made previous years by mobile app developers was: continuing to believe that an install is, in and of itself, a sign of success. A couple of years ago many apps collected most of their revenue from paid installs. Companies are still focused on reaching the App  Store’s Top 10 downloaded chart,  investing six figure sums, with the idea that a top 10 spot will bring a next wave of organic acquisition.

The problem with the strategy is 1) there are signs that the organic boost from such ‘chart hacking’ isn’t what it used to be and 2) if you’re not retaining those users, what does it matter anyway? Because, the bad news is 60% of apps are deleted within a month of being downloaded. 90% are deleted after 6 months. And only 4% of users are still using apps they installed a year before (Apptentive).

(For a more detailed walkthrough of three companies who, for better or worse, chased top 10 positions, see Eric Seufert’s post on Mobile Dev Memo).
Wait, wait, don’t leave me.

What these trends mean is, if mobile app developers resolve to do only one thing this year, it should be to prioritize long-term retention and conversion of users to a paying state that meets business objectives.

App businesses should focus on delivering the best user experiences and the most relevant marketing campaigns possible. We need to ditch the ‘one size fits all’ approach and stop subjecting all users of a mobile app to pretty much the same experience. Not only does this break a cardinal rule of the marketing industry - do your best to treat customers as individuals - but this also doesn’t reflect the personalized treatment that consumers have come to expect in digital environments. Campaigns and experiences need to be personalized, customized, and highly targeted.

And with the mobile application marketing technology on the market today, marketers should all be segmenting and testing their offers and messages to specific groups of people, and quickly making changes or expanding successful test campaigns. If companies will test marketing actions and create dynamic experiences, they can find what best boosts in-app revenue, and they will improve retention and long-term value.

If you’re a marketer looking to operate a successful mobile application this year, I hope this is your year to focus on user retention. With a new mindset to focus on building long-lasting relationships, you can look forward to seeing exponential growth in users, and importantly, increased revenues.

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