How to Measure the Success of Your App: A Guide for 2023
Bringing your mobile app to life is a significant feat. Although, it’s not the endgame but the beginning of your app’s descent to greatness. After hiring an app developer and developing your mobile app, the next step is to monitor its performance and see if it succeeds. Measuring your mobile app’s success would help you see room for improvement. It would also help you make informed decisions and adapt your mobile app to suit your customers’ requirements.
But how do you measure the success of your mobile app? Thankfully, a few metrics can help you estimate your app’s performance and determine its success. This blog will discuss six essential metrics to measure mobile app success. Let’s begin:
Essential Metrics to Measure the Success of Your Mobile App
1. Retention rate
The retention rate is the percentage of customers or users who continue using a product or service over some time. It is an essential metric that helps you assess customer loyalty and shows how many customers will return to your app. Besides, the retention rate lets you see how many customers you’re losing to churn and identify why users aren’t sticking around.
Here’s how to measure the retention rate:
Several users also used the app the following month/Number of users in the previous month.
Let’s understand this with an example:
Suppose 1000 users were using the app in June 2023. By the end of July month, only 500 new users returned to use the app, and the rest moved on. The retention rate in this case would be: 500/1000 = 50%.
Note: Monitor the percentage of users returning to your app over a 30-day timeframe to examine retention. It would accurately assess how many users you’re losing to churn and why.
2. Churn rate
The percentage of users who actively stop using your app after a specific time is called the Churn rate. It is an essential metric that’s used to measure customer attrition. Here’s how to measure the churn rate:
(Number of customers lost during a period/number of customers at the beginning of the period) * 100.
Let’s understand this with the help of an example:
Suppose 100 people used your app at the beginning of June 2023. But by the end of June 2023, only 70 users left. It means you lost 30 customers. Hence, the churn rate would be
(30/100)*100 = 30%.
A higher churn rate indicates that customers are not satisfied. It also impacts revenue and growth. Hence, monitoring the churn rate and taking proactive measures to reduce it is essential.
Here are a few things you can do to reduce your mobile app’s churn rate:
- Improve the customer experience.
- Address customer concerns before they become significant issues.
- Enhance product features to make them user-friendly.
- Implement retention strategies to bring back churned customers.
3. Daily active users (DAU)
Daily active users are customers who are using your app regularly. The metric helps you determine how indispensable an app is for those who have downloaded it. It is an essential metric because downloading an app doesn’t mean users also find it invaluable.
Here’s how we calculate daily active users:
- Determine a period.
- Define user engagement.
- Identify unique users
- Count the number of users engaged during the specific period.
The number represents daily active users (DAU) for that period. Similarly, the number of unique users interacting with your app monthly is called monthly active users.
4. Return on investment (ROI)
Return on investment is the return or profit you get after investing an amount. It is a financial metric using which we measure the efficiency or profitability of an investment.
Here’s the formula for calculating the return on investment:
(Net Profit/Cost of Investment) * 100.
Let’s understand this with the help of an example:
Suppose you earned revenue of $2000 on a $1000 investment. Now the net profit, in this case, would be $2000 – $1000 = $1000.
Now, using the formula (Net Profit/Cost of Investment) * 100, the ROI will be $1000/$1000 * 100 = 100%.
A positive ROI means a profitable investment, while a negative ROI represents a loss—also, the higher ROI, the more favorable investment. Return on investment (ROI) can help businesses make informed decisions. Hence, you must carefully monitor this investment.
5. Cost per acquisition
Cost per acquisition (CPA) refers to the average cost of acquiring a new customer. This KPI is closely related to return on investment (ROI), and it helps you evaluate the efficiency of your marketing campaigns.
Here’s the formula for calculating the Cost per Acquisition:
Total cost of acquisition/number of acquisitions.
For example, Suppose you had to spend $10000 to acquire 50 new customers. In this case, the cost per acquisition (CPI) would be
$10000/50 = $200.
The cost per acquisition is typically expressed as a monetary value like dollars or Euros, and it helps you gauge the effectiveness of your marketing campaigns. A lower cost per acquisition shows that your campaigns are highly cost-efficient, and a higher CPA suggests you need to optimize your campaigns.
6. Customer lifetime value
Customer lifetime value helps you calculate the value each customer brings to your app when they use it. It is a crucial metric to help you understand each customer’s long-term profitability and value.
Here’s the general formula for calculating customer lifetime value =
The average revenue per customer * average customer lifespan
Some businesses also use advanced models considering discount rates and customer churn. They also think of historical customer data like purchase history, average order value, purchase frequency, and retention rates for calculating customer lifetime value.
Customer lifetime value is an essential metric that helps you identify high-value customers and make informed decisions to maximize the long-term value of your customer base. Hence, it would be best if you did not underestimate it.
In a nutshell,
There needs to be more than building a mobile app. Measuring whether the app you developed was successful is equally crucial. Setting up and measuring KPIs would help you measure and optimize your app’s performance to ensure it meets your requirements and business needs. That’s why you must never underestimate their importance and actively monitor them.
The metrics mentioned above gave you a fair idea of how to measure the success of your mobile app. It’s time to hire an app developer, bring your app idea to life, and track your app’s performance using these criteria for success. Best of luck!
