The great baseball legend Yogi Berra once said,“If you don’t know where you are going, you’ll end up someplace else.” While this lesson is applicable across almost any area of life – it’s especially critical in app development. Here’s the caveat; while an end goal is of critical importance, what is equally as important is being able to track the performance of this goal so that you clearly understand whether you are actually moving closer to that goal or pushing further away from it. While tracking performance for most businesses can be challenging for many businesses, app startups have an advantage – tracking app metrics is quite simple if you know what to track and what to look for.
Unfortunately, many apps fail and there are definitely more failures than successes. Successful startups heavily assess the metrics associated with their application so that if something isn’t performing as expected, they can catch it quickly and bring it up to par. For many ‘failed’ apps, only a few numbers are given consideration – especially traffic and revenue. While these factors can give some insight into an app’s performance, high traffic and revenue alone doesn’t mean your app is succeeding. Consider these scenarios and whether they truly identify a successful startup situation:
- App “A” receives 50,000 new downloads every month, but only 1% of them visit the app a second time.
- App “B” earns $100,000/month in revenue; more than most app startups. However, they spend $110,000/month on advertising.
- App “C” has a download rate of 20,000 users per month to it’s free version, but almost no subscriptions to it’s premium versions.
Are these apps successful? They are if you only consider traffic and/or revenue, but when considering other variables, it is obvious that neither of these examples are sustainable over the long term – and maybe not even over the short term.
The key to ensuring that your app is performing successfully is to track the right KPIs; constantly checking them to make sure that you are reaching the right objectives. Why are app metrics important, specifically?
- They can help you identify opportunities to improve your software or strategy.
- They can help you identify when your strategy is not performing up to par.
- They give you a historical representation of whether you are experiencing growth over a specified period of time.
In the following article, we will take a look at which app metrics are most important over each stage of the software development and launch process.
When Should You Track App Metrics?
There are many different types of app metrics that can be tracked, but knowing when to track each metric is as important as knowing which metrics to track. Some metrics are better tracked during the launch stage, while others are more important during the growth and scale stages.
- Launch – This stage is the beginning of the app journey when an app is just released to the market. In this phase, metrics can help you prove your concept, identify new opportunities, and catch potential weaknesses in your application.
- Growth – This stage represents the time when an app concept has already been proven and the developer is seeking to retain and monetize their users. Metrics here can help you improve engagement and improve the lifetime value of each customer.
- Scale – In this stage, metrics allow the developer to improve their brand image and compete better in the marketplace.
Launching With The Right App Metrics
Once your minimal viable app has been created and launched to the app store, there are three app metrics you should be especially focused on to make sure that you are on track with your marketing and executional assumptions:
Number of Downloads
The number of downloads or installs you receive provides immediate feedback on how well your app is performing in the market. If you are receiving many downloads, or many downloads relative to your marketing efforts, then you know you are on the right track. Very few (or zero) downloads likely suggests that something is flawed in your marketing strategy, your app description, or your assumption of the customer problem.
According to CBInsights, approximately 14% of apps that fail do so as a result of poor marketing. Knowing how to advertise an app is key to achieving a high number of downloads. If a lack of marketing is holding you back from reaching users, here are a few techniques you can implement to improve your number of downloads:
- App Listing Optimization: In many cases, apps can fail because they don’t express the benefits of the solution well enough to users. While marketing an app is critical to its growth and success, statistics show that 63% of users discover a new app through the app store. Consistently optimizing and A/B testing your app listing will allow you to slowly perfect your listing for best performance.
- Paid Advertising: Paying for ads through platforms like Facebook is an easy way to drive targeted traffic directly to your application. With millions of users, these advertising platforms allow you to reach consumers from your exact demographic and generate new downloads. The caveat is, ads can be expensive for a startup – especially if they aren’t optimized for best performance. Like app listings, it is critical to constantly test, optimize and improve your ads for best performance and lowest cost.
- Referral Marketing: An extremely effective method for getting new users to your application is to tap into the network of any current users. Dropbox, for instance, offered extra storage to users that invited their associates to sign up. By employing similar referral strategies, you can acquire more users faster and for a fraction of the cost. Furthermore, this type of marketing adds in an extra layer of buyer confidence – since the referral is coming directly from someone they know and trust, they are more likely to respond positively.
App downloads relate to how well you are able to attract users to your application, but does not measure how successful you are in engaging those users. The level of user retention on the other hand, will give you a better understanding as to whether the users you attracted actually return to the app after their first use. According to Localytics, across every industry, the average app only retains 20% of its users after a period of 90 days.
How is user retention defined? Usually, it is defined as the number of users that return the app at least one time within 30 days or one month.
If user retention is low, this means that while people are downloading your app, something is causing them to abandon it. Statistically, 1 in 4 users abandon an app after only opening it once. This can be for one of many reasons – maybe the app was too difficult for them to navigate; maybe they simply forgot about it; or maybe, the app just doesn’t solve their problem the way they expected.
The first step to improving this app metric is to identify why users aren’t returning. Furthermore, these steps will help you improve your user retention:
- Improve The Onboarding Experience: Consider the process that a user will experience as they download, install and use your app. Is it simple to understand? Does it have a familiar navigation? App users have very limited patience – if they don’t understand your software right away, it’s very likely that they will abandon it. Make sure that users understand exactly how to use your app – whether it be through user videos, an initial tutorial, or a strong FAQ section that answers their usage questions.
- Implement Push Notifications: App users don’t just use a single app, and in some cases, they may use several apps to accomplish the same goal. Even if your app perfectly suits their need, they may not have realized its effectiveness at first exposure. They may have even forgotten that they downloaded the app – or may have planned to come back, but never did. In any case, push notifications can remind users to come back and give your app another chance. However, push notifications can become annoying to users if they are overused; and if misused, can be a surefire way to ensure that a visitor deletes your app immediately. Use push notifications only on rare occasion, and consider how receptive your users may be to these notifications before launching them.
- Retarget With Ads: A less intrusive way to regain the attention of users that have abandoned your application is to use retargeting ads – ads through Google and Facebook (among other platforms) that allow you to directly reach individuals who have downloaded your app, but have not returned since their initial visit.
Cost Per Acquisition (CPA)
Outside of making an app go viral to receive organic traffic, it is likely that any long term customer acquisition strategy will come at some cost. Likely, you will need to engage in a combination of paid marketing techniques to promote your app and draw in new users.
Cost Per Acquisition (CPA) refers to the amount that must be spent to acquire a single user.
CPA is an extremely important app metric – if the cost to acquire a customer is higher than the value of that customer, you may quickly find your startup falling into the financial red zone. By tracking cost per acquisition per marketing channel, it is simple to identify which of your marketing efforts are performing well, and which ones are too costly for the business to sustain.
There is no quick fix to improving your CPA; however, every marketing channel needs to be optimized for best performance. As you optimize your marketing strategy to perform more effectively, you will slowly begin to reduce your CPA until it is optimal for your specific business. The optimal CPA for any business is one that is lower than the value of the customer that has been acquired. A business that earns a revenue of $1 per customer cannot sustain a CPA of $5, while a business that makes $1,000 per customer would find a $5 CPA to be more than ideal for the growth of their startup.
Tracking The Growth Of Your App
Once you’re able to acquire new customers at an acceptable cost, and are able to retain those customers over several months; it is important to track how users are using your app so that you when you acquire a customer, they stay around for the long term. As you grow your application, several other important app metrics come into play, such as Stickiness Ratio, Average Session Time and Screen Views Per Session.
While user retention (or how many people visit the app multiple times per month) is important, an app’s Stickiness Ratio takes it a step further. Specifically, the Stickiness Ratio is formulated by first tracking two other metrics – DAU and MAU:
- Daily Active Users (DAU) refers to the number of users who visit your app over a 24-hour period.
- Monthly Active Users (MAU) refers to the number of users who visit your app over a 30-day or one month period.
Stickiness Ratio is calculated as the ratio of users per day in comparison to users per month – or DAU/MAU.
If an app’s stickiness ratio is at 10%, this would mean that on average, a user visits the app 3 out of 30 days. Likewise, a stickiness ratio of 90% would mean that on average, a user visits an app 27 out of 30 days.
Increasing the ‘stickiness’ of your app means transitioning users who use the app a few times a month into those who use an app multiple times per month. This can be done by improving the in-app experience, reducing bugs, offering new features, or by incentivizing users for using the app continuously throughout the month.
Average Session Time
It’s a great thing if people are signing into your app often, but the true test of how engaged your users are is how long they stay on your app when they visit. Consider an app like Snapchat, where users not only sign in often, but spend hours engaging with the application and it’s network. Popular mobile games also have long average session times – engaging the user so that they stay on for long periods of time.
There are some ways to minimally improve average session time like gamifying the experience or regularly updating with fresh content – but people stay on apps that solve their problems and command their attention. Focus on improving your solution to truly meet the need of your users and it will automatically entice them to stay on your app for a longer period of time.
Screen Views Per Session
As its name implies, this app metric refers to the average number of screens viewed during a single session. In general, the more screens that a user interacts with during each session; the more engaged they are with your application. Typically, an app with a high number of average screen views per session, will also have a high average session time and a high stickiness level.
Since screen views per session relate directly to engagement, improving this metric often comes down to delivering the features and abilities that your audience is looking for. When users find a great solution to their problem, they tend to engage more thoroughly with that solution, visit it more often, and view more screens each time they visit your app.
Bonus Tip: It’s not just about how many screens a user views, but also how they engage with those screens. Use a great heat mapping or screen recording software to gauge the user’s experience as they use your app. This type of software will give you major insight into what pages, features and screen areas are most important to your audience – and on which screens they are dropping off. Use these insights to improve on areas that are not performing well, or to create a more desirable feature list that better reflects what the user is looking for. Furthermore, this type of software can help you identify issues and bugs within your application such as app crashes, latency issues and loading speed.
Using Metrics To Scale Your App
There are also some subjective app metrics that aren’t necessarily ‘hard data’, but that can still be used to effectively improve your app software. While many metrics require you to analyze the data deeply to pull out valuable insights, these metrics provide you with the feedback you need – right from the customer’s point of view. While there are many metrics that are important in this stage, two subjective metrics that are extremely critical are App Reviews and Net Promoter Score.
App Store Reviews
There’s an old saying that goes, “The customer is always right.” Whether this is 100% true or not, there is one thing that is a definite fact – reviews from previous users will weigh heavily on a potential user’s decision to choose to download or not download your application. According to studies by Apptentive, 59% of people check an app’s reviews before downloading it. With a majority of positive reviews, customers become excited about downloading an app so that they can experience the same level of benefit as previous users. Likewise, even a single negative review can turn off a potential user if it is powerful enough to make them believe that they will meet the same fate of dissatisfaction – and if they still download and eventually realize the same fate, it is likely that they will leave an equally negative review.
As an app startup or developer, you have little direct influence on this metric. However, by paying attention to what users are saying about your app (whether positive or negative), you can get a better grasp on what is working with your application, and what needs to be fixed to suit your customer’s needs more effectively.
Even without reading reviews, your app’s star rating can equally persuade users to download or not download your app. A rating under 4 stars may have the ability to instantly convince a potential user that the app is not worth their time. Welcome all feedback about your app, whether positive or negative. The first step to optimizing your app for best performance is to know what aspects of your software are helping your users and which are hindering them from a successful and positive experience.
Net Promoter Score (NPS)
Net Promoter Score helps businesses measure customer experience and better predict potential growth. This metric isn’t just centered around software, but is used by all types of businesses over various industries to better understand customer satisfaction.
NPS is calculated by comparing the difference in the number of users that are considered ‘detractors’ and those considered ‘promoters’. Specifically, Net Promoter Score is calculated through the following steps:
- Customers are asked to rate your app/product/brand on a 10 point scale; with 1 being the lowest satisfaction score and 10 being the highest.
- These customers are then categorized into three groups – detractors, passives and promoters. Those who rate between 1-6 are considered detractors, or unhappy customers that can hurt your app or product through negative word of mouth. Those who rate between 7-8 are considered passives, or individuals who are relatively satisfied, but can easily be swayed to a competitive solution. Those who rate a 9 or 10 are the most loyal customers who will continue to use your app and may even refer others to download it.
- Calculate the percentage of those in each category. For example, if 100 users are surveyed and there are 20 detractors, 30 passives and 50 promoters; then this would calculate to 20% detractors, 30% passives and 50% promoters.
- Finally, NPS can be calculated by subtracting the percentage of detractors from the percentage of promoters (% of promoters – % of detractors). NPS is not expressed as a percentage however, but as an absolute number. In the above example from #3, the formula would look like this:50% promoters – 20% detractors = +30 NPS
Net Promoter Score can range anywhere from -100 to +100. Any score over 0 is considered a good score; over 50 is considered an excellent score; and over 70 is considered as the best of the best . A score under 0 means that there are more people dissatisfied with your app than those that are satisfied; and more research needs to go into figuring out what your customer is really looking for to increase their satisfaction while using your application.
Having knowledge of how your app is performing is critical – however, metrics are useless if you just occasionally look at them and do nothing to improve them. Every app metric has a purpose, and understanding the purpose behind each can help you continuously improve your app for better acquisition, longer retention, longer per-session usage, more referrals and a higher satisfaction.
It’s not only important for you to understand how these metrics relate to your product, but it’s also important that you’re able to gather the right insights and deliver them to your app developers so they can translate them into code and create the features that will really drive the success of your app.
If you need help choosing the right metrics for your app or analyzing the tremendous amount of data you collect, we’d love to help! Contact us to discuss your app with one of our startup consultants to find out how to use app metrics to take your startup to the next level.