Do 7-day retention rates matter in mobile apps?

Kontagent Mobile App RetentionJason Wu will be a speaker at Kontagent Konnect 2013 in San Francisco on May 20-21. Register now–space is limited.

When it comes to mobile, getting customers to try your application is a challenge, but making sure they come back can be even harder. In today’s crowded mobile market, content is king. And, it’s that content that will drive (or kill) your user retention.

Anyone who has a mobile app knows retention is the first step in mobile success. The longer a person uses an app, the more likely they are to start exhibiting the behaviors developers want—whether it’s monetizing in a game, banking on a phone or just engaging with a brand.

Savvy mobile-first businesses use analytics to understand their data is vital to maintaining and increasing customer retention. And among the many metrics available to gauge an app’s success, the 7-day retention rate is among the most revered. What’s ironic is that some companies don’t really understand why it’s important—other than that it is.

While seven days may seem somewhat arbitrary, there’s a solid basis for why it’s considered such a vital key performance indicator. And understanding this will help you determine what makes a good 7-day retention rate—as well as why it might not matter.

Seven days is more than just a week

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The 7-day retention rate lets you understand customer app use cycles.

It’s a common misconception for companies new to mobile analytics to assume that the 7-day retention rate exists because it makes following week-by-week performance easier. While convenience is definitely one part of the equation, the other is human behavior.

Think about your average week. Chances are it’s probably pretty routine—commute to and from work during business days, relax on the weekends and so forth. Now think about when you use your mobile (and desktop) devices. It’s probably pretty consistent from week to week, too.

Since customers naturally repeat the same app usage cycles every seventh day, measuring 7-day retention rates makes sense because it aligns with a person’s week. Therefore, by tracking this key performance indicator (KPI), you’ll be able to better predict how you app will fare in the future, both in terms of profitability and growth. It also allows you to more accurately compare how different cohorts of customers will react to any app new revisions or enhancements you implement.

But the caveat to all of this is that 7-day retention rates are only important if your app lends itself to weekly use. This means it may not always be the best KPI to measure performance. So what’s the solution?

“X” days may be better than 7-day retention rates

Retention is actually best measured on an app-by-app basis. This is because not every app is necessarily used by customers every day or week.

For instance, in games, tracking 7-day retention rates makes sense because good games should encourage constant play. If customers aren’t playing at least once a week (or day), chances are they won’t be returning in the future, so it’s crucial to have a high 7-day retention rate.

On the other hand, mobile banking or hotel booking apps should be measured under longer retention periods because most people only pay bills once a month or travel less frequently. For these apps, tracking retention rates of 30 days (or more) is more useful.

So back to the original question: Do 7-day retention rates matter? They do, but only if they matter to your app and your expected customer usage. Obviously, higher retention is always better. But before you start worrying that your weekly retention rates are low, think about your app’s purpose and how it fits into your customers’ weekly behavior.

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