How to Engage and Retain App Users. Part 2: Retention.
As you already know, user engagement is not just another fiction of marketers. It is a survival technique in the wild world of the digital market and a method for your business to stay afloat.
Speaking of engagement and retention, there is no clean-cut separation between these terms in marketing apps. They rather complement and sometimes interchange each other. You may have your vision, but retention is always more about work with an existing base of users which in turn requires a specific strategy and tactics to get them back.
To a certain degree, user retention is a challenge. The app market is full of applications and each coming day their number skyrockets. Like it or not, but you have to fight for user attention for your own good. If you are not ready for it, you are not ready to run your own business in today's realities.
Marketers from all over the world must agree that the key to a good retention rate is engagement with app users as early as possible. So, it is a compelling reason to bring value into relations with your customers from the very beginning of their journey with your application. According to Bain and Co., user retention increase by 5% can increase your company's profitability by 75% at least. Quite impressive stats, isn’t it?
So why not make your app engaging for users and stay in contact with them during all their journey? In this sequel about engagement we will talk about user retention and things to consider about launching retention marketing nowadays.
Move in the Right Direction
After you have launched your business in the market, it is like a ship on the sea. It is no easy task to keep it afloat that requires a considerable amount of work in a lot of fields simultaneously: strategy and resource planning, marketing, personnel administration and so on.
As every boat, business also has a certain destination. While strategy planning sets up the end point, marketing gives you a direction. So, to stay up nowadays, the main efforts should be put into relationship with users, not only into app ranking in app stores. When you give customers what they truly want, your chances to succeed increase.
Hence every marketing effort should be targeted at building customer relations in order to increase customer lifetime value (LTV). Speaking of this metric, it is one of the important indicators of your business health.
In a nutshell, customer lifetime value is a predicted revenue a company can get from the entire relationship with their customers. It gives a clear insight of your clients so that you could see how valuable they are for your business. In the majority of cases, LTV is used to define the target audience you need to acquire for your company growth.
Despite its vital importance, this metric is traditionally quite difficult to calculate. If you tried to do that for your company earlier, you probably struggled with complex algorithms and formulas. There are a lot of methods now and each one is developed to cover specific aspects of business. The most straightforward way to calculate LTV is to take the revenue you earned from each customer and subtract the money spent on customer acquisition and service.
How LTV can be used to improve app retention rate? First of all, it makes possible to define a group of customers you should be focusing more on in your engagement strategies. According to the Pareto principle, roughly 80% of the effects are produced by 20% of causes. The shares may be not so accurate but approximately 20% of your customers bring you around 80% of your total revenue.
By calculating LTV, you can define who those most profitable 20% of users are for you to target your marketing at. You need to make every effort to increase satisfaction of this audience and provide the most value right now. In the previous part, we have already described a couple of techniques to make users happy with your app, so you should definitely take them into account for all further actions.
Not to miss any details, here you may check part 1 of the story: How to Engage and Retain App Users. Part 1: Engagement.
Tip 1. Use LTV metrics as a basis for planning the budget for engagement marketing. Plan your spendings on user acquisition and app user retention according to their effectiveness in order to get maximum value for your company in the long run.
If you believe in power of analytics and user behavior patterns, you can move mountains. With the help of analytics data, you can identify your ideal target customer and create super personalized and winning campaigns. As said earlier, it is much more profitable to invest in interaction with existing users than acquire new ones. They already know your brand and would likely support your app monetization campaigns.
Divide and Conquer
The roots of this phrase go back to the time of Rome’s emperors when they set landowners against each other to conquer and dominate over the lands. In your marketing strategy, you should apply this slogan literally - divide your audience into groups with common characteristics and “conquer” each of them accordingly. Personal approach to customers is what brings real results today and user segmentation will help you do it properly.
So, what is customer segmentation and what role does it play to increase customer retention rates?
Customer segmentation simply represents the process of identifying key differentiators to divide the audience into smaller groups with similar characteristics. Such segments are used to understand their needs better, define what content will be relevant and valuable for each of them and use it appropriately.
Segmentation is tightly bound to analytics data. Mobile analytics is certainly a very powerful tool today but data alone can’t drive user engagement and boost mobile app retention rates. Customer segments allow you to better identify user behaviour and their response to your marketing campaigns.
Tip 2. Customer segments don’t remain static so keep track of the users in your groups over time. Interests of people change so they can jump from segment to segment or even move out of all of them.
Segmentation of customers is more than just a simple process. It is a foundation for successful app marketing and great app conversion. It requires preparation and time to investigate people for further breakdown into groups. There is no rule of thumb on the number of segments to create. You can form as many groups as your business needs. The main principle here is that your segments should be unique, identifiable and different from each other.
If you don’t know where to start, start from separating your audience into three big segments. But keep in mind that a very broad segmentation minimizes your chances to closely target users while a too narrow segmentation may cause redundancies and decrease in profitability.
Tip 3. Track such audience factors like demographics, location, in-app behavior and device usage in order to strengthen your future marketing campaigns and target at your ideal customer.
It’s true, an ideal target customer really exists. This persona is not universal as each business has its own peculiarities and serves specific client needs. At the beginning of your way, you may have just rough sketches of your potential customers. The portrait becomes clear when you analyze and monitor your audience behaviour nonstop.
Once you have identified your target customer persona, you can adjust your services right to their wants and needs. In-app analytics will help you define your client’s characteristics and create the overall portrait of them. This data is very useful in building highly targeted campaigns. It also improves conversion exponentially. Remember that sophisticated marketing requires a sophisticated user segmentation.
Tip 4. Study your audience keenly and recognize their behavior patterns. This helps to build super personalized programs and launch them when the timing is right.
User segmentation together with understanding the customer lifecycle lay in the heart of engagement campaigns. Mobile marketing companies pay a lot of attention to these factors in order to keep user retention rates heading north.
Retain Users Smart
Marketers use quite a lot of techniques to reach out to their customers when they start to drift away. The most widespread ways are push notifications and in-app messages. Let’s take a closer look at these communication channels and define their nature.
Push notifications (or push messages) deliver messages to users when they are out of an app. Not so long ago, they contained solely text, but today, extended push notifications settings allow adding images, videos and sounds. This is definitely a great way to bring back those users who are not currently active in the app.
At the same time, misuse of push notifications can hurt your relationships with customers. These messages can be irritating if they have no value for users. Unfortunately, marketers can exploit them heavily for product promotion which makes customers opt-out of annoying notifications. When misused, this channel becomes no more effective than banner ads on websites.
Tip 5. Users who opt-in notifications represent the greatest value for your company as in most cases they tend to engage with your app on a regular basis.
Speaking of in-app notifications, they represent contextually relevant messages which are sent to users while they are in the app. You can deliver them and thus directly communicate with people when they have your app open. For example, you could ask your users for feedback on application performance. But when it comes to time-sensitive messages (e.g. sale is ending today), then push notifications are better.
It doesn’t matter what channels you are going to actively use for your marketing campaigns. The source of proper user engagement is in personalization and context of your outreach. Thus, if you don’t want to make your audience unhappy, pay a lot of attention to the content which is relevant and interesting for your target segments. Analytics and customer segmentation will provide the insights on what needs each group has.
Below, you will find some advice on how to enhance your customer outreach strategies:
Establish a multi-channel messaging strategy. Use in-app messages and push notifications together to reach out to users. Depending on outreach content and purpose, they can be more or less effective. You increase the success of your campaigns by combining the two kinds of messages.
- Prepare relevant content for messaging. Relevant and personalized content brings impressive results. Amaze your users with perfectly timed and helpful messages all the way through their journey and convince them to stay with you for a long time.
- Use deep linking with in-app and push messages. Embed relevant deep links in your messages instead of a link to the app home page. It saves a user time to search for the appropriate screen.
- Apply A/B testing in mobile retention campaigns. Prepare and send at least two versions of your campaign in order to see which of them yields more conversions. Measure the outputs of each message and continue to invest in those that bring you more profit.
- Run triggered campaigns based on user actions in the app. Set up triggered events which enable automated response to your users’ actions. Such automation of marketing campaigns greatly increases individual approach. People would rather stay with companies that directly communicate with them and respond to their needs.
Tip 6. Bind your campaigns to the customer lifetime value to see whether they were successful or not. Therefore, compare LTV of users who were influenced by your campaign with LTV of those who were not.
If you want to maximize your outputs and be very satisfied with retention rate calculations, you need to make users trust you and your company. Their trust is the backbone of your marketing. The tips described above are nothing if your customers don’t give much credence to you.
To build trust you should do the three following things: listen, communicate and encourage. When you listen to your customers, you know their needs and how to improve your service. When you communicate with the audience, you build strong relationships. When you encourage them, you increase their loyalty.
The Last But Not the Least
Understanding your audience is a key to creating deeper user engagement with your app. Unfortunately, customer retention is something you should constantly work on even if you have already allocated significant costs to develop an app with outstanding user experience. With no efforts put into it, it can work for you only for a while, but then you will still need to earn your customer’s loyalty. Keep in mind that your competitors never sleep.
User engagement and retention represent a science which continuously develops. You may know all the basics and follow the theories, but you will probably continue learning from your own experience with your audience.
However that may be, here are five lessons you need to remember in your further work with your app:
- Never cut corners on good app marketing - it may have bad consequences on your business.
- Never be overconfident about the quality of your service - your customers may think different.
- Never underestimate your customers’ feedback - if they talk to you, they are interested in your service.
- Never stop experimenting with campaigns and measuring the outputs of your marketing efforts.
Now you have basic insights on engagement marketing and its specifics for mobile apps. The most important thing is to wisely apply this knowledge to your case. However, if your application is still an idea, don’t you think it’s high time to contact mobile app developers and bring it to life?
Is your application still an idea?
Don’t you think it’s high time to contact mobile app developers and bring it to life?)