Retention Rate Defined

Retention rate describes the percentage of users who use your app or service over a given period of time. This is a critical metric, especially for subscription-based services, for measuring product performance and the success of a company. Retention rates are often used as a reflection of revenue, customer satisfaction, and as a way to identify areas for product improvement. Retention rate is the opposite of churn rate, or the percentage of users your company loses in a given period of time.

Using in-app messaging is a great way to reward users who are already engaged with your app, create a better onboarding experience to reduce churn after download, and boost your retention rate. Removing functional roadblocks and minimizing your app’s learning curve is one of the best ways to create a benefits-oriented user experience and avoid day-one churn.

How to Use it in a Sentence

A 5% increase in customer retention rate results in a 25 to 29% increase in revenue.

Common Retention Rate FAQs

Mobile retention rates vary depending on vertical and fluctuate with new users’ fleeting relationship with new apps immediately after installation. In fact, the average app loses 77% of its daily active users (DAUs) within the first 3 days of installation.

Below are the retention rates on day 30 of select mobile app installs (worldwide) by category:

  • News: 11.3%

  • Business: 5.1%

  • Shopping: 5%

  • Finance: 4.6%

  • Gaming: 2.4%

The following formula can be used to calculate your user retention rate:

Number of active users during current time frame ÷ Number of active users during previous time frame x 100 = User Retention Rate

A high retention rate is often indicative of a healthy app and sustained growth. A low retention rate means there is likely something missing from your mobile experience, causing users to lose interest or uninstall.

Poor mobile retention rates are a result of friction within the user experience or the absence of a strong customer engagement strategy. Keep your finger on the pulse of user pain points to analyze and address them accordingly. By actively pursuing customer feedback through surveys, customer interviews, and A/B testing, you can begin to identify areas for improving your UX and communication.

Yes, absolutely. Mobile push notifications can be a crucial component in catching user attention and fostering long-term user engagement. Transactional messages (like abandoned cart notifications or order updates) and marketing messages (like seasonal promotions) can both be used contextually to enhance the user experience and drive in-app purchases.

Remember, mobile users have become wary of overly communicative apps that clog their devices with irrelevant marketing efforts. Your messaging flows should be personalized, well-timed, and relevant to the needs of your target audience.