Retention rate is a key metric that calculates the percentage of users who continue using your product or service over a given period. Let’s dive deeper into understanding retention rates meaning, how you can calculate them, and improve this rate in your business. 

What is the Meaning of Retention Rate?

Before understanding the retention rate, it is important to know what retention means. Retention is the process of keeping users engaged so that they keep using an app over an extended period. 

When it comes to app marketing, the retention rate meaning is the percentage of users who still use an app for a certain number of days after it’s installed. A high retention rate means your current customers value your product and are providing a sustainable source of revenue. 

Importance of Retention Rates

Retention rates are not only helpful for understanding the app performance, but also to determine how satisfied users are with the app. They pinpoint the reason why some users may disengage from the app, providing you insight on how you can improve the app’s performance and extend the lifetime value (LTV) of your users.

It plays an integral role in helping businesses understand:

  • The loyalty of their users
  • How good their customer experience is
  • The value their users get out of the app
  • If they have a sustainable base to maintain their business

If your app has a higher retention rate, it is beneficial for your business as users who stay active for longer periods provide more engagement. This increases the scope of monetisation as well as opportunities. 

Related :   Deciphering Target Rating Points (TRPs)

By carefully observing and analysing the development of retention in your app over 30 days, gather data to identify the reason behind any drop. According to this, implement relevant strategies to increase the number of interested users and improve the longevity of your app. 

How to Calculate Retention Rate?

The retention rate calculation over a given period can be calculated using the basic formula:

  • Number of customers at the beginning of a defined time (CS)
  • Number of new customers who signed up for your product during this specific time (CN)
  • Number of customers you had at the end of the period (CE)

Therefore, the formula is: 

  CE – CN

—————   x 100


Now, let’s take an example to understand this better. 

Suppose your mobile app had 1000 users at the beginning of the first quarter and ended the quarter with 1300 users. If you have gained 400 new users during this time, your retention rate would be as follows:

1300 – 400

      =  ——————  x 100


      = (900 / 1000) x 100

      = 0.9 x 100

      = 90%

Strategies to Improve Retention Rates of Your App

If you want to enhance your app’s retention rate, you need perseverance and patience. Follow the below strategies to improve your overall business success:

  • Use User Feedback to Identify App Weakness

User feedback can help you identify the aspects of your app that customers are enjoying, and what they aren’t. You can gather this product data from reviews and reviews. Identify the bottlenecks to improve customer experience, and hence the retention rate. For instance, if your app is loading slowly, you can improve the technical aspects for faster and more effective loading.

  • Fine-Tune Your Messaging
Related :   Programmatic Advertising Meaning and Programmatic Campaigns

An app uses push notifications to in-app campaigns to make their users aware of their products or services. App marketing plays an essential role in retaining customers. Therefore, depending on your vertical, you can leverage user stories to attract other users back to your app. 

You also need to keep marketing your app so that it is on top of the minds of customers. By using marketing techniques like weekly newsletters, podcasts and downloadable PDF resources, you can increase customer engagement and loyalty. Moreover segmenting users and implementing retargeting campaigns can also be used to elevate user experience.  

  • Prioritise Onboarding

For most verticals, the first day gives you the best chance to extend a user’s lifetime value (LTV). Ensure your users can make the most of your app by optimising the onboarding experience from the point of install.

  • A/B Test Your Product

Testing your app using different metrics can help you identify what works best for your intended audience. A/B testing new features provides you with the necessary insight to help you lower the churn rate and increase customer retention. 

  • Use Automation to Motivate Inactive Users

If any customer has remained inactive for several weeks, you can set up automated email through your customer relationship management (CRM) software to encourage the user to take action. Keep track of how the users interact and how this information to re-activate their interest. 

  • Reward Loyal Customers

It is crucial to make your users feel appreciated so that they are motivated to keep using the app. You can curate rewards like 1-month free app experience or give discounts on numerous features. This would not only increase engagement but also retention rate. 

Related :   What is an Offerwall?


Thus, retention rates provide an understanding of the number of users using your product, after a given period. Since high retention rates are valuable to a business, tailor and implement different strategies according to your user base to increase app usability as well as its revenue.