Trends Report: The New Standards for Mobile App Retention
You've built what you think is a great mobile app, but do the people agree? Retention is the most important metric today; it is simply the best measure of how valuable customers find your product.
Two years ago Fred Wilson set the retention bar for mobile apps with the 30/10/10 ratio. 30% of customers will use the app each month, 10% will use the app daily, and 10% of that 10% will be using the app at any given time.
A lot has changed in the mobile app world in the past two years (hello sharing economy, tablets and phablets). So is 30% retention still the right bar? And does this generalization hold true across verticals with very different customer goals and experiences?
The short answer: nope.
No Single Mobile App Retention Benchmark
There is no single mobile app retention benchmark. Retention numbers are as varied as the apps themselves. This was one of the main takeaways from our Investor panel at DDC: your numbers have to be specific to your company and product. Don't pull a number out of thin air or use an industry-wide average. That's like jumping up in the air with your eyes closed and saying you set a new standing vertical jump record.
There is a big variation in mobile app retention by vertical with the lowest rates hovering around 10% and the highest above 50% retention after one month. The lowest average rates of retention we found were in the education and media app verticals, both hitting an average of 11% after one month. E-commerce and Music hit a mid-level with 13% and 15% average rate of retention after one month. The average for Social and Photo/video apps was on the higher end at 27% and 23% rates of retention after one month. The only verticals to hit Fred Wilson's 30% average were Games and Messaging at 31% and a whopping 56% average rate of retention after one month.
Ask questions and look at your own data. Then you can really understand how you stack up against others in your space and set the right retention benchmark for your app.
Key Takeaway: Your app is unique -- its numbers need to be, too.
To Win, Beat the Benchmark
This report establishes the new standards for mobile app retention benchmarks by vertical, now it's time for you to put them to use. It's important to understand how retention marked against these averages will dictate your company's long-term growth. For a business to grow and beat its competition, it needs to consistently retain more than the average percentage of its customers.
To make this more concrete, I'll use two mobile music apps as an example. Mobile music app A has 25% retention and mobile music app B has 20% retention. Assuming they start from the same customer base and keep their retention rates steady for six months, mobile music app B will have 15% more customers by the end of those six months.
Key Takeaway: With retention, every percentage point counts.
The recipe for retention: instant gratification vs. customization
Looking at the app verticals, we found that each vertical's experience can be summed up in one of two ways: instant gratification or customization. It's easy to assume that mobile apps that give people the ability to instantly accomplish something--play a game, read a news article, look at photos--have a higher rate of retention.
But looking at this data set, that does not hold true -- customization eeks out ahead, boosted by strong retention numbers for Messaging and Social. What gives? It is quite possible that the high retention rates for messaging and social apps are correlated to enhancements like Facebook Login, since users are able to launch an app and instantly get connected to their core network, having already done the legwork in months (and years!) prior.
Key Takeaway: Design your app to give customers something right at the start. A snippet of information or even a tour could hook them in.
Know your retention rate and how it compares to the benchmarks for your vertical so you can set a clear, focused goal with your eyes open. We used the commonly accepted industry definition for mobile app retention--the percentage of people who first used a given mobile app and then used it at least once more in the 30 days after their first use--to set these benchmarks.
The data in this report is based on an aggregated set of the more than 15 billion actions analyzed by Mixpanel each month. In Mixpanel, an action is defined by our customers and can be anything from logging in to an app to making a purchase or finishing a level in a game. This report focuses on activity in mobile applications, segmented by Operating System-Android and iOS. The report analyzes actions during August, September, and October 2013.