Using Funnel Analysis to Understand Where You Are Losing Your Mobile Users

May 7, 2014

Companies try to build awareness of their apps and services using PR activities, paid advertising and different types of promotion. Once people become familiar with the product, we want them to stay with us for a long time as our loyal customers and generate revenue for the company. However, there’re quite a few steps to take, and many users give up for different reasons. The general consensus across forums, independent research, and brand-provided analysis is that most apps have a 1-2% average conversion rate. Games, because of their addictive quality and high time in app, can see average rates as high as 10%, whereas SaaS apps sometimes struggle to hit 1% on in-app goals.

Looking at the simple metrics such as app downloads to measure your business would not give any real perspective on how successful the application is. In order to track the return on investment (ROI) from your different acquisition channels and iterate fast, you need a system. The very true business rule says: “What gets measured gets managed”.

The user acquisition funnel is one of those useful tools that allow you to get a clear picture on your users flow and measure your acquisition efforts.

Understanding User Acquisition Funnel

Publishers want users to engage with the mobile apps in a particular way. The funnel maps the whole process of users’ interaction with your company, starting from the very first moment they learn about your application until the moment they become your regular users. Between these two points there will be potential drop-off that you need to identify; then you can make necessary improvements and optimize your activities. The primary purpose of the funnel is to show where you’re losing users and adjust your activities accordingly.

Set up a goal which is considered to be a successful result of your interaction with the user. It can be monetization: subscription, paid download, completed in-app purchase; engagement (reaching a particular level in a game); or retention (e.g. launching app 5+ times). Moving down the funnel includes a series of steps towards a goal.

Each intermediate step in the process is measured in the funnel with its own conversion rate, so you can check the percentage of users that are completing those actions towards the final goal.

Let’s say that 10,000 people found out about your app through paid advertising, 1,000 people visited the app store website, 100 people downloaded the app, 10 people opened the app for the first time and 1 of them has become a regular user. So the conversion rate for each step in the funnel is 10%, and overall conversion rate of the funnel is 0.01%.

Funnel allows finding the weak places that are producing significant drop-off. Each of them represents an opportunity to improve the user experience and marketing efforts.

You can also use funnels for a comparative analysis, evaluating results for different market segments (e.g. by country) or in different timeframes (April vs October), or check different steps to see where’s the most significant drop-off.

There are a number of mobile analytics solutions to help you with user acquisition and conversion analysis, such as Flurry. Once you have created funnels in Flurry, you can filter them by time period, app version, custom segment, or acquisition channel, making funnels extremely powerful tools for testing new features and improving your products.

Mobile Application Funnel Example

At the charts below you can see a Funnel example for one of our mobile applications. It lets us see when users drop off in a multi-step process.

We can check how many people hit the main screen and end up converting into registered users, and which step of the registration turns out to be the most challenging and causes  loss of users.

A chart shows the number of people that entered the funnel for a given period and how many of that number eventually completed the last step.

A chart shows the conversion rate for a given period, as well as the overall conversion rate. It allows you to compare results throughout the product lifecycle.

The next step is to put your knowledge into action and optimize each step. Improved user retention leads to higher revenues over time from advertising and in-app purchases, as well as higher brand engagement and awareness.

With many analytics services available, funnels are easy to set up and give a good sense of user behavior, tell you where to look for growth and how to refine your app.