App Stickiness and Its Metrics

May 5, 2014

Most mobile startups these day are very data driven. There is a myriad of mobile analytics tools to choose from (such well-known market leaders as Flurry and Google Analytics and many others) that provide tons of data about users, their behavior, patterns, events, and so on. That’s why, it’s so easy to find yourself overloaded with information and get lost without any truly valuable insights.

So, how not to get stuck with vanity metrics and focus on what’s important? When thinking of app stickiness, there are four metrics that come in very handy.

Retention Rate

You will find this metric in most of analytics packages as it’s indeed one of the most important. In simple words, retention rate shows the percentage of users that open up your app for more than one time.

Retention can be broken down to:

  • MAU (monthly active users);
  • DAU (daily active users);
  • Stickiness (DAU/MAU).

Tracking MAU you could follow, for example, some seasonal events and offer various promotions. This could be useful in forecasting for paid services. Also, this metrics give information for developers to experiment with the app and keep the track record of users returning to the app.

For mobile apps the average retention rate is about 10%. However, Flurry claims that after 12 months only 4% of users are still using the app they downloaded.

Average session length

That’s a basic metric that shows how long users stay within your app in each session, on average. You can often find a comparison of average session length for iOS vs Android users.

However, recently Localytics have published some very interesting data comparing various session length in different geographical markets. Looking at European and US markets, they found that in a course of 2013 an average session length in Europe has increased by over 2 minutes, which represents a 51% growth.

This and other metrics make expert believe that there is a tremendous opportunity for app marketers and developers to grow their business among European users. European app users prove to be interested and engaged with their apps, being open to new opportunities they spend even more time in mobile apps than US users.

User life cycle length

Every user goes through a life cycle within a mobile app. In terms of duration, various app categories show different cycle lengths.

For example, for utility of news apps it’s about 8-9 months. For mobile games it’s much shorter and fluctuates between 3 to 4 months.

A simple graph below represents main milestones within a user life cycle length. Some of the milestones can be successfully conquered with a user-centered design and some demand a thoughtful mobile strategy.

Life Time Customer Value (LTV)

LTV is more of a business/marketing metric that shows what revenue an individual user contributes over while engaging with your product. Unlike the previous metrics, LTV can’t be just measured with an analytics tool within your app. Often you will find complicated formulas that might help you to find out your user’s LTV. To keep it simple, rather than going into the details of how to calculate LTV, let’s see what it consists of. To define lifetime, you need to measure average number of sessions that your users engage with your app in and the average length of each session.

To understand the ‘value’ in LTV, you need to accurately calculate the revenue from all the revenue streams for the app which are revenue from in-app purchases, revenue from out-of app products (in retail, for example), virality and word of a mouth, cross-selling/cross promotions.

I’d like to point out that out-of app sales often get disregarded, however, they might be a very important stream of revenue. For example, retail sales of Angry Birds merchandise hit $400 M in 2012, and doubled in 2013. When you know your user’s LTV, it’s much easier to understand which up front marketing costs make sense to gain loyal customers in the long run.

For instance, let’s take a freemium model in mobile games that has become a default model for many game developers (Zynga, Rovio, GameLoft). Also, looking at the top twenty titles in the Apple App Store 90% of them are using the freemium model.

To sum it all up, I’d like to say that nowadays success in mobile space is impossible to achieve without some forward thinking. So, defining the right metrics, sticking them and tweaking your product based on the results are the first steps to keeping your users happy, hence engaged and grateful.