App retention rates are improving as app publishers shift from an early focus on "downloads" to more mature customer acquisition and retention models, according to a new study by Localytics (http://www.localytics.com). The overall app industry improved retention rates 19% over the last year.
App publishers for the iPhone and iPad saw the greatest success, with retention rates 52% higher than those on Android. In the early days of the App Store and Android Market (Google Play) publishers focused on developing an initial presence and, with the limited data available, could only measure success by the total number of downloads. However, many of those downloads were poorly acquired and never turned into long-term customers, according to Localytics.
In March 2011, Localytics published research finding that 26% of downloaded apps were only used one time. Fortunately, another 26% of customers used new apps more than 10 times. This contributed to a shift in app marketing away from download metrics to a focus on customer retention and lifetime value that is producing results one year later.
Among customers who first downloaded a phone or tablet app in 3Q 2011, compared to 3Q 2010, both one-time usage and long-term retention numbers improved, notes Localytics. One-time usage of apps dropped over 15%, from 26% to 22%. More importantly, those who used an app more than 10 times in the following months improved 19%, growing from 26% to 31%.
As app customer retention rates improve, apps are increasing their dominance over the mobile. Nielsen reported that the average number of apps on a smartphone increased from 32 to 41 and apps’ share of internet usage increased from 73% to 81% in the last year.
Comparisons with the online web are also revealing. Pew Center’s Project for Excellence in Journalism released their 2012 State of the News Media report in March 2012. The report found that 29% of news app users launched the app more than 10 times -- per month. That compares very favorably to the fewer than 10% of online users who visited a news website more than 10 times per month.
One of the key takeaways of these studies is that a publisher’s app and web users are very different, says Localytics Websites attract many casual users who arrive from search, social or referring links. App users more purposefully install an app and return directly to it, self-selecting themselves as more qualified and more valuable customers.
But not all apps are created equally, says Localytics. Delving deeper into the retention and user metrics, iPhone and iPad users are 52% more loyal to their apps than Android users. A healthy 35% of Apple iOS users launched an app more than 10 times after downloading, compared to 23% of Android users. The average Android app also suffers from 24% one-time usage rate compared to just 21% one-time usage rate for iPhone and iPad.
iPhone’s far greater app retention rates is also an echo of the 94% retention rate of iPhone itself compared to 47% for Android, per the Piper Jaffray research group. When users upgrade from iPhone 3GS to iPhone 4S, they might download the same apps (or transfer them) to their new device. In most cases, that iPhone 4S will look "new" to the app publisher even though the user might have months of prior exposure to the app on the older iPhone 3GS. To correctly identifying returning users across devices, publishers need to record registration data as part of their app analytics.
Localytics provides app analytics for iPhone, iPad, Android, Blackberry, Windows Phone and HTML5 apps on over 300 million devices. Two of the key metrics provided are the number new users and the retention of those new users.
For this study, Localytics compared the retention rates of two cohorts: users who first downloaded an app to a new device in Q3 2010 and users who first downloaded in Q3 2011. The retention metrics for each cohort are based on how many times apps were launched on the devices through March 15 of the following year. All results are based on worldwide app usage.
