KEY METRICS MOBILE APP DEVELOPERS
NEED TO KNOW
What is the best way to monitor the health of an app once launched or during beta stage? What are the key metrics that your team should use? What are the key metrics that investors will judge your startup by?
These are all crucial questions to be asking and we've detailed some of the most important metrics (although not an exhaustive list) below.
1. Numbers of Downloads and Installations
Creating a great marketing launch and what we call “Linear Explosions” (from many grass roots marketing campaigns for your app), will help your app to drive many downloads. But be careful not to be fooled by vanity success as downloads are only really a measure of downloads not users “loving your product”. So whilst it’s important to have as many downoads as possible you will want to aim for customers that are “sticky” and keep coming back to your platform.
2. Number of Users
The number of people who use a mobile app may differ significantly from the number of installations. For example, the same user may download Facebook on both a mobile phone and a tablet. More interestingly, gauging the number of users over time lets you calculate an app’s retention rate.
3. Lifetime Value (LTV)
A lot of app developers judge success based on download numbers or position in the app store rankings. But these numbers don’t indicate whether an app is financially successful. Downloads and rankings are great, but they don’t give an indication as to how much value particular users are actually generating over the period in which they use the app.
Life Time Value is a measure of the value provided by a single user over the period of time in which they remain a user of the app.
4. Retention Rate
Retention is how often people return to your app. Retention directly contributes to LTV because the longer a user keeps coming back to the app, the more opportunity there is to extract value from them. Recent reports from App Annie shows that “the average app loses 77% of its daily active users (DAUs) within the first three days after its installation." Within 30 days, it’s lost 90% of DAUs. Within 90 days, it’s lost over 95%. One of the most successful mobile freeium games ever “Subway Surfers” was able to maintain over 50% rentention rate for 60 days after customers downloaded the app. This meant that customers loved their product (product-market fit) and that the game was addictive. In order to gain a high retention rate, it’s usually a by-product of making an awesome and addictive app. So concentrate on that first.
5. Active Users
Active users are important. These are basically users who regularly engage with an app are not likely to stop using the app. According to a 2016 App Annie report, the average app engaged 39% of its monthly active users. In other words, less than four of ten users who installed an app opened the app more than eleven times in the first 30 days.
There are a number of classifications of Active Users: DAUs (daily active users) and MAUs (monthly active users). You will need to track both metrics religiously, which can be done using great tools like Mixed Panel that can run inside your app generate your team this data.
6. Session Length
This equates to how long your users or customers spend on your app, each day, week or month. It’s a very important measurement, because the longer they stay on your app, the more ways you can monetise your customers through IAPs (in-app purchases), ads (banner ads or video ads) or other means. It’s a very healthy indicator of your app's health, if people are spending a lot of time on it each day. A small indie game like Crossy Roads, has over 100 million downloads, but more importantly, people are addicted to the game and spend long periods on their game. Guess what happens when people spend a lot of time on Crossy Road? They watch video ads that are streamed strategically throughout the game and each ad can earn the game developer $2! Now imagine millions of people each day play your game and those video ads consistently stream. The results can be over millions of dollars of revenue per month.
The average time users spend in an app varies greatly by category—from 7.55 minutes in gaming apps down to just 2.61 minutes in technology apps according to Statista.
7. Average Revenue per User
An app’s average revenue per user (ARPU) is the total revenue the app generates within a given time period, divided by the total number of active users for the same period. There are many benchmarks for ARPU which vary greatly by category, by country and by revenue model. This is also Average Revenue Per Daily Active User (ARPDAU) ARPDAU, which is similar to ARPU except it is calculated on a daily basis. To calculate ARPDAU, simply divide Daily Revenue by Daily Active Users.
8. Cohort Analysis
Cohort anaylsis essentially allows you to group mobile-app users into cohorts on the basis of various factors. This way your team can better gauge the effects of your changes, optimizations, and monetizations for an app. Again, Mixed Panel is a great third party tool to use for this. For example, we’ve seen teams that group users into cohorts based on their point in the user lifespan. By tracking the behavior of each cohort, it allows you to better optimize the experience for users at each point in the product cycle. Remebering always, the key is to create product excellence through an awesome, unique and addictive experience. Everything else comes from that.
9. Virality or K Factor
Virality is the number of users that are brought in by each existing user from the app. New users can be brought in by existing users via social sharing, viral incentive campaigns, word of mouth etc. This is a non-monetary form of value that users can provide. Growth hack marketers use a metric called the “viral coefficient”. The viral coefficient is a quantitative measure of virality. Often calculated as the average number of invitations sent by each existing user times the conversion rate of invitation to new user. The viral coefficient is referred to as the K value.
How do startup teams calculate the viral coefficient? Take the number of your current customers. Let’s say that’s 100. Multiply this number by the number of invites your current customers send to their friends. Let’s say you find that each customer invites 15 of their friends. Find the percentage of those invitees who became your new customers. For example, let’s say that’s 10%. So if 100 of your customers sent out 15 invites each that becomes 1,500 invites. Then if 10% of them became your new customers then that is 150 new customers. You started with 100 customers and you gained 150 extra customers. Now divide the number of the new customers acquired by the number of existing mobilr customers and you have your viral coefficient metric. In this example, it will be 150/100 = 1.5. Meaning, that your app has a viral coefficient of 1.5.
Did you know, that the biggest driver of new users and growth for Dropbox from 2001 until present day, was their viral coefficient marketing hack. When new users accepted to trial Dropbox for free, they were also asked for 5 emails of their colleagues or friend’s whom may also be interested in Dropbox too. The new customer then had to send an invitation to those 5 emails in 24 hours to receive an extra free 2GB storage. This one viral coefficient hack was the biggest driver of organic traffic to Dropbox today, where they now have over 500 milion users. Time to start thinking about your own viral coefficient marketing hacks.