Last update: December 2018

3 mins to read

Why You Should Track Retention Rate

In today’s marketing landscape, messaging campaigns can be tracked and reported on, making it much easier to understand how they affect sales, awareness and usage for mobile apps. Customer retention rate is the main method used to verify whether app users are positively engaged. Retention rate, according to multiple industry exports, is the ratio of the number of retained customers to the number at risk.

For years, the most important mobile metric had been acquisition, with marketers turning a blind eye on the amount of customer churn. Nowadays, more apps are shifting towards retention, focusing more on in-app behaviour within in-app messaging and promoting engagement and win-back of lapsed users.


How to calculate retention rate?

There are many formulas available for calculating ‘retention rate’, but the standard one used by marketers for customer retention is:


Retention Rate = ((CE-CN)/CS) X 100

CE = number of customers at end of period

CN = number of new customers acquired during period

CS = number of customers at start of period


While this formula may seem intimidating, it’s actually quite easy to use. Here’s an example: Let’s say you begin the month (or whatever time period) with 1000 mobile installs. You gain 100 new users, but lose 40. At the end of the period you have 1060 mobile installs.


Using the formula provided above:

1060-100 = 960; 960/1000 = 0.96; x 100 = 96. The retention rate for the period was 96%.


Why should you care?

Many apps do nothing about retention rates, but the ones who do, find that on average retention is as low as 4-20% 90 days after install (Localytics 2017). This means 80% of mobile app users churn within 90 days! A good point to remember is the retention rates can vary depending on different categories of apps. Many products and services are available to help improve retention, although there’s still more to be done.

Calculating customer retention is a good place to start. The goal is to maintain higher customer retention since it’s much cheaper to retain existing users than to attract new ones. Retained customers are more likely to continue usage, pay for additional services, share with friends and try any additional apps that might be available. Using data that most marketers are already familiar with also means retention can be a good benchmark for marketing efforts. To app owners, maintaining strong retention rates mean that you’re doing a good job at keeping users happy and positively engaged over a period of time. Leading to more app usage and revenues.

Mobile marketers are searching for next generation capabilities to increase engagement using location-based marketing, contextual trigger points, machine learning and even artificial intelligence to figure out the best way to retain users.

Smart Push Notifications lead to higher retention

It’s better late than never to start caring about user retention and the ways it affects your mobile marketing campaigns.