You can proudly say your app is a reality and live in the App Stores. But now the question becomes: how is it performing? What's the value of your users? How often is the app being used? In short: how do you know if the app is a success? This is essential information for App Store Optimization.
However, there's no single miracle metric for measuring an app's success. It's necessary to consider a range of indicators. Besides download numbers, there are several other key performance indicators (KPIs) that reflect an app's performance. In this blog, I'll cover five metrics that are essential for measuring your app's success and how each can be calculated.
1. User Acquisition
The first metric is user acquisition. These are users who download your app from various sources, such as organic search or paid campaigns. You can measure the quality of users acquired through advertising against organic users, and analyze which users from specific campaigns have a lower Lifetime Value (LTV). App attribution and cost per acquisition (CPA) are both important for acquisition metrics. App attribution shows how your app's users were acquired, while CPA shows how much was spent to acquire each user. Through app attribution and event tracking, you can determine which campaigns were most successful and which aren't worth continuing to invest in. CPA is a key metric that lets you calculate return on investment (ROI) and determine the most cost effective way to acquire new users.
2. Lifetime Value
Lifetime Value (LTV), also known as customer value, is another important KPI. It represents how financially valuable a user of your app is over their entire lifetime. It can be broken down into average monthly value, value per customer, and in terms of loyalty. LTV can be calculated by multiplying the revenue a customer generates by their average usage duration of the app. LTV is a key metric that helps you understand how much each customer is really worth and how much you can afford to invest in acquiring and retaining that customer. A higher LTV means a customer is more valuable, and more can be spent on marketing and other activities to retain them.
3. Retention
Retention is calculated based on the percentage of users who return to your app, based on the date of their first visit. By analyzing retention rates, you can see when users tend to drop off and at what point they need to be re-engaged. Understanding the average time that elapses between sessions for each user group allows you to automate the user experience to encourage daily app use.
You can also use retention figures to determine which campaigns are most valuable in the long run.
The campaign that generates the highest number of downloads isn't necessarily the one that generates the most revenue or attracts the most loyal users.
Retention is key to converting app users into transactions, since retaining a loyal user base is the best way to increase LTV and revenue.
4. Net Promoter Score
The Net Promoter Score (NPS) of a mobile app measures the level of customer satisfaction and the likelihood that users will recommend the app to others. This is an important metric, as a higher NPS can help you save time and money on marketing tactics. To calculate NPS, users are asked just one question: "How likely are you to recommend our app to a friend or colleague?" Users then give a score from 0 to 10.
Scores are divided into three groups: promoters (score of 9–10), passives (score of 7–8), and detractors (score of 0–6). NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. A higher NPS means more users would recommend the app, which can indicate greater customer satisfaction and may have a positive effect on the number of downloads and active users. And who doesn't want free word of mouth marketing?
5. Active App Users
The fifth key metric is the number of active app users. This indicates whether users are actually engaging with the app regularly, or simply downloaded it and never returned. Daily active users, weekly active users, monthly active users, and "stickiness" all provide a clearer picture of your app's usage and growth. Stickiness measures user engagement, it's the ratio between your app's daily active users and monthly active users, expressed as a percentage. Apps above 20% are considered good, and apps above 50% are considered excellent.
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