Retention rate refers to the percentage of customers that stay with a company (or app) over a set period of time.
What is retention rate
Retention can mean different things across different industries and even inside companies.
In the world of SaaS for example, retention rate might refer to the number of customers still paying for a product over a given time period whereas in education, retention rate would refer to the number of students still enrolled at the end of a school year.
In a company, the marketing department might be looking at the retention rate of its customers while the HR department would look at employee retention as a measure of success.
A key metric for reducing mobile app churn
In mobile advertising, retention simply means keeping mobile app users engaged with an app.
Today, in a hyper-competitive mobile space, it is as important for marketers to focus on retention as it is on user acquisition.
Until recently, acquisition was considered the most important mobile app metric. It’s still important, but with churn reaching alarmingly high rates, holding on to users is at the core of an app’s success. If users don’t stick around, monetization is all but impossible.
Understanding your retention rate can also help improve user LTV and inform decision-making around in-app events as you’ll have more granular data around when (and hopefully why) users are leaving your app.
How to calculate retention rate
To calculate retention rate for a given date range, divide the number of users who were active on a specific day since the install day by the total number of users who launched the app for the first time during the selected date range.