Ever heard of a leaky bucket?
While it’s not the loveliest image, it’s the visual often referred to when you have a sales funnel that suffers from increased user drop off, or churn.
The leaky bucket analogy is one that every growth marketer fears: acquiring new users who uninstall your app only to accelerate your UA efforts to make up for it. It’s like trying to fill a leaky bucket with water.
Why user churn is important
This problem — a leaky conversion funnel — is one most apps face. Don’t believe us? Check these stats from Clevertap on app churn:
- The average US user spends 90% of their mobile usage in their top five apps.
- 25% of apps are uninstalled after just one launch.
- The average churn rate for app users is around 95.5% within 90 days.
The good news is that reducing app churn by just 5% can boost profitability by 75%. This, combined with the fact that acquiring a new customer is 5-25x more expensive than retaining one shows that investing in a robust retention and retargeting strategy is the most important thing your app can from Day 1 of your user acquisition campaigns.
What is user churn?
User churn refers to when users stop using your app. To understand this group of users and how they are affecting your app, you have to calculate your user churn rate. This is the percentage of users who uninstall or stop engaging with an app over time.
App churn rate is the inverse of app retention rate. Whereas app retention rate reveals the rate at which your app keeps users engaged, your app churn rate shows you how fast users begin abandoning your app in your lifecycle.
For your app to grow, the number of users who stay active in your app must be higher than the number of users who leave.
How to calculate your user churn rate
To calculate your app user churn rate, first set up your time window. As an example, let’s say you want to identify your app user churn rate for the month of April. First, figure out how many users left your app in April. To do this, you’ll have to measure the number of users you had at the beginning of April and how many you had at the end. The difference between these figures represents the number of users that abandoned your app. This should be the numerator in your formula.
Next, divide that number by the number of users you had at the start of the period, in this case, at the beginning of April. Multiply this number by 100 to get your user churn percentage.
So, if your app started with 1000 users in April and ended with 800, your churn rate formula would look like this:
(1000 – 800) / 1000 = 200 / 1000 = 0.2 x 100 = 20%
You can calculate churn rate for any length of time: daily, monthly, annual, etc.
Calculating churn time
While our example makes calculating churn straightforward, certain details can complicate it. One of them is your churn time. If the time period you identify doesn’t properly include your rate of churn, your rate will be inaccurate. So, before you even start calculating your churn rate, make sure your window is properly identified.
To do this, take a sample cohort of users from your app, collected over several months. It’s important to make sure your baseline is clean.
Now, split the sample by inactivity windows. That is, users that have been inactive for 3, 5, 7, 14 and 21 days. Don’t worry if the samples overlap. Check the percentage of users that come back after each inactivity period (3, 5, 7, 14 and 21 days). Our recommendation is that when the percentage reaches below 5, then you’ve got your churn window.
How to minimize high user churn rates
Now that you know how to identify leaks in your funnel, let’s outline ways to fix them. Here are a few:
- Optimize your onboarding: Take a critical look at your onboarding process and how it engages a user at the initial stage. Churn can happen when an onboarding flow is too complicated or lengthy. Streamline your flow, limit the number of steps, and get users to experience your competitive value as rapidly as possible.
- Use deep linking: Deep links send a user directly to a desired location inside an app. They’re a simple and proven way to enhance your user experience by seamlessly continuing the customer journey. In fact, deep links can increase your conversion rate by over 50%.
- Use personalization: Personalization through dynamic retargeting ads, relevant push notifications and in-app modals can enhance your retention and increase customer loyalty.
- Streamline your content: This strategy depends on your app type. For example, if you’re a game app, it’s important to make sure each level of your game is engaging and balanced when it comes to difficulty. Make sure there is enough content in each level and section of your app to keep users engaged.
- Identify what’s happening right before users churn: One of our top recommendations as you evaluate your app’s churn is pinpointing the key drop off points. What are users doing right before these key points? Pinpoint these “leaks” in your funnel and figure out how you can fix them.
Takeaways on App User Churn Rates
User churn and a leaky sales funnel is a pressing challenge that all apps should seek to tackle. Why? Because reducing churn by just 5% can boost your app’s profitability by 75%!
- What is user churn? The amount of users that uninstall your app or become inactive over a certain period of time.
- How do I calculate my churn rate? Identify your time window and divide the number of users at the beginning of the period with the amount of users that abandoned your app during the period.
- 5 ways to minimize high app user churn rates:
- Optimize your onboarding.
- Use deep linking.
- Personalize your messaging and ads.
- Streamline your content.
- Identify what’s happening right before users churn.
Looking to limit user churn? Consider adding retargeting to your retention strategy.
Our team can help you craft personalized retargeting campaigns that enhance retention and limit high app user churn rates. Reach out to us to discuss your lifecycle marketing needs!