User retention not only measures how successful a company is at acquiring new users, but also how successful they are at maintaining and satisfying existing ones. While 5-20% of new customers drive sales, brands end up closing deals with 60-70% of existing customers. Additionally, a mere 5% increase in user retention results in a profit increase of 25-95%, with 65% of a company’s sales coming from returning customers.

Placing value on retention increases ROI, boosts user loyalty, and brings in new customers organically. These factors separate successful apps from unsuccessful ones. Keep reading to understand why your brand should focus its efforts on user retention. 

Why User Retention is Important

User retention is vital to the success of an app because it forms the foundation of sustained growth and profitability. Beyond the initial excitement of user acquisition, retaining users ensures a consistent and predictable revenue stream. A high number of installs does not necessarily mean an app will be successful. In order for an app to be a success, there must be a high level of engaged users. Engaged, loyal users are more likely to make in-app purchases, engage with advertisements, and explore premium features, bolstering an app's financial stability. 

Additionally, retained users provide invaluable feedback, which helps developers identify areas for improvement, fix bugs, and enhance the overall user experience. These users can become advocates, spreading positive word-of-mouth and referrals, which can significantly reduce acquisition costs. In a fiercely competitive app market, maintaining a dedicated user base is a strategic advantage, allowing the app to stand out, adapt to evolving trends, and thrive in the long term.

The Main Benefits of User Retention

While making sure that user downloads are consistent and growing, it’s even more important to retain existing users. User retention drives sustained revenue, saves costs, drives  high ROI and helps improve the overall user experience. 

Sustained Revenue

Retained users are more likely to continue using an app, make in-app purchases and engage with promotions over time. Higher retention rates are directly connected with higher profits. In fact, increasing your customer retention rate by just 2% has the same effect on profits as cutting costs by 10%. Additionally, increasing your app’s retention rate by 5% can increase your company profits by 25-125%. This is a predictable revenue stream that can be a lifeline for app developers, helping them cover ongoing operational costs and invest in further improvements.

Cost Efficiency

Acquiring new users is more expensive than retaining existing ones. In fact, the majority of research shows that it is up to 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer. Retained users also tend to spend more money over time than users who have interacted with an app once or twice. Their familiarity with the app and positive past experiences lead to higher in-app purchases and increased subscriptions. 

By nurturing relationships with loyal users and continually meeting their needs, app marketers can reduce the costs associated with handling complaints, returns, or customer service inquiries. In essence, customer retention not only secures a dependable revenue stream but also minimizes marketing expenses and operational costs, making it a highly cost-effective strategy for brands.

Feedback and Improvement

By having loyal users, there are more opportunities for app marketers to obtain valuable insights and feedback. Building strong relationships with users allows apps to gather data on their preferences, needs, and pain points. This information can be used to refine products, services, and marketing strategies — ultimately leading to better-tailored offerings and improved customer satisfaction.

Data and Personalization

Users that frequent an app consistently generate a great deal of quality data surrounding their preferences, behaviors, and usage patterns. App marketers can leverage this data to personalize the user experience, recommend content or products, and tailor marketing messages, resulting in higher user engagement and satisfaction.

Users expect a high level of personalization within the apps that they frequent, therefore leveraging these data insights is important for an apps’ success. Consistent users are the key to unlocking the potential of data-driven personalization, creating a valuable cycle where improved user experiences lead to even greater user loyalty and more valuable data insights.

How to Retain Loyal Users

Apps that retain their users ensure long-term success and profitability. However, retaining loyal, paying users in the competitive landscape of mobile apps can be a challenging process. In order to ensure users consistently re-engage with an app, it's essential to deliver ongoing value to users. This means not only maintaining the quality of your app but also frequently enhancing it. Regularly release updates with new features, improvements, and exclusive content that cater to your paying users' needs and preferences. Make them feel their investment in is continually justified and that they are part of an evolving, vibrant community.

Secondly, personalized engagement is key. Segment paying users based on their usage patterns, interests, and demographics. Leverage this data to send targeted and relevant communications. Push notifications, in-app messages, and email campaigns can be highly effective when they provide personalized recommendations, special offers, or reminders. Building a relationship with paying users and demonstrating their individual preferences are valuable can foster a deeper sense of loyalty, and encourage them to stay active and engaged with an app. 

Takeaways of The Value of User Retention

Placing value on retention increases ROI, boosts user loyalty, and brings in new customers organically. Engaged, loyal users are more likely to make in-app purchases, engage with advertisements, and explore premium features, bolstering your app's financial stability. 

What are the Main Values of User Retention

  • Sustained Revenue: Higher retention rates are directly connected with higher profits. In fact, increasing your customer retention rate by just 2% has the same effect on profits as cutting costs by 10%. 
  • Cost Efficiency: Research shows that it is up to 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer. Retained users also tend to spend more money over time than users who have interacted with your app once or twice. 
  • Feedback and Improvement: By having loyal users, there are more opportunities for app marketers to gain valuable insights and feedback. 
  • Data and Personalization: Users that frequent an app consistently generate a great deal of quality data surrounding their preferences, behaviors, and usage patterns. App marketers can leverage this data to personalize their user experience, recommend content or products, and tailor marketing messages.