App User Retention Remains A Struggle; In-App Messages Move the Needle

Localytics-App-User-Retention-Rate-2012-2016-May2016Mobile app use is highly concentrated, as recent data from comScore shows that mobile users spend the majority of their app time with their single favorite one. And while Nielsen data shows that time spent with smartphone apps is increasing, the number of apps that smartphone users typically access hasn’t really budged in the past few years. Now, Localytics provides some more context, detailing mobile app user retention rates in its latest annual study on this topic.

The Localytics data shows that almost 1 in 4 users (23%) abandon an app after a single use. This figure remains squarely within the 20-25% range observed from 2012 onwards, suggesting that either apps are not doing enough to engage users, or that this is simply typical user behavior.

Another popular measure of app user retention is to look at the percentage of users who launch an app at least 3 times. Over the past 5 years, the percentage of users who fail to reach this mark of loyalty has ranged from 38% (2014) to 45% (2015), with this year’s figure (41%) again firmly within that range.

While app user loyalty hasn’t changed much in the past few years, the cost to acquire a loyal user certainly has. As recently as 2014, the cost of acquiring a loyal iOS app user (one who opens an app three times or more) for brands who proactively market their apps hovered between around $1.50 and $2.25. Over the past year, that figure has not dropped below $2.50, and has spent most of the time above the $3 mark, even surpassing $4 on a few occasions. That data comes courtesy of Fiksu, which tracks the “Cost Per Loyal User Index” on a monthly basis.

As for iOS apps, user retention has slightly improved this year, per the Localytics report, which notes that 24% of users are abandoning an app after a single use, down from 26% last year. On the other end of the spectrum, this year 36% of users return to an app 11 or more times, up from 32% last year.

For all apps measured for the study, user retention (those returning at least 11 times) rose to 38% this year from 34% in 2015.

Earlier research from Urban Airship has indicated that push messages have a strong effect on retention rates, and this latest study from Localytics suggests that push messages’ “often overlooked cousin” in-app messages also can have a significant influence on retention rates.

Indeed, in-app messages appear to have an outsized effect on abandonment and retention. The report notes that only 17% of users abandon an app after a single use when seeing an in-app message, compared to 26% of users who do so for apps that don’t utilize in-app messages.

On the other end of the spectrum, apps using an in-app messaging strategy retain 46% of users for at least 11 launches, compared to 36% of users for apps not using in-app messaging.

About the Data: Localytics says it processes 120 billion data points monthly across more than 2.7 billion devices and 37,000 mobile and web apps. For this analysis, the firm measured the percentage of users who only used an app once as well as the users who returned multiple times. For the in-app messaging analysis, Localytics compared the percentage of users who did or did not return to apps who are using in-app messages compared to those who are not. The timeframe for the study was March 1st 2015 – April 30th 2016.