How Should You Define Customer Retention?

Calculate Retention

Calculate Retention

Few metrics are more important to App Marketers than retention. The ability to keep users coming back to your app is the key to everything from calculating marketing ROI to computing the lifetime value of a customer. The importance of retention is well known to marketers and probably comes as no surprise to any of you that I am writing about it here.

What is surprising however, and a little alarming, is the ambiguity of how we are defining retention. Sure, we understand what retention means, but exactly how it should be calculated is more than a bit of a gray area for marketers. The problem is that the way retention is calculated can lead to substantially different results depending on the method.

If you are hoping the rest of this article will be dedicated to the “correct” way to calculate retention, you will leave this page disappointed. However, I did want to outline the three most common computation methods, and take a look at what they are good for. For the following examples, we will look at a 30 day timeline as it is most commonly used, but retention can and sometimes should be calculated on 60 day or even 90 day timelines.

Daily Retention

In english: Daily retention is the percentage of your users that return to the app every single day in your measured period of time. During a 30 day time frame, all users that return every day during those 30 days are considered retained.

How it is calculated:

Mobile User Retention Calculations

When it is used: Daily retention should be used sparingly as it is the most restrictive. It offers a good indication of engagement levels for your app.

Rolling Retention

In english: Rolling retention is the percentage of your users that return to the app on or after a given day. During a 30 day time frame, all users that return to the app on day 30 or any day after are considered retained.

How it is calculated:

Mobile User Retention Calculations

When it is used: Rolling retention is often used to calculate the churn rate of an app as rolling retention is basically 100% minus churn.

Return Retention

In english: Return retention is the percentage of your users that return to the app at any point during a given period. During a 30 day time frame, all users that return to the app at least once before day 30 are considered retained.

How it is calculated:

Mobile User Retention Calculations

When it is used: Return retention is often used to assess the onboarding quality and user experience of an app as it shows how many users return after first open.

Now that you have a better understanding of key retention calculations, find out how to improve them with the latest edition of the Mobile Marketing Index.

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