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By 12 Jan 2016

Seven Customer Metrics Every App Developer Should Track

Any app developer will tell you, analyzing your data effectively is a huge factor in determining whether or not your app will be successful. With mountains of data to segment, it can be difficult to know what metrics are the most beneficial. Below, we’ve compiled a list of the metrics you should be tracking to boost your revenue, user base and overall app success.

1.Session Length

Session length, the length of time users are spending in your app per session, influences many other important metrics, including retention rate, lifetime value and average revenue per user. It’s usually the first pulse of whether or not your app is providing a worthwhile experience to users and an indicator of points within your app where users are getting stuck. The longer users spend in your app, the more opportunities they have to monetize. If you’re noticing a short average session length, it’s clear that users are either becoming confused or not being engaged with enough content.

To take analysis a step further, you can segment this data to see what audiences are spending the most time within the app – a huge indicator of whether or not you’re hitting your target market. This information can be useful for monetization and future app development.

2. Time in App

The time in app metric is simply how long a user spends in your app over a given period of time. This metric is a complement to session time, and helps you understand usage behavior. For instance, you may find that users typically have shorter sessions, but cumulatively they add up to a considerable amount of total time spent in the app in a week. By gathering this data on your users, you will be able to segment more effectively. An active user that spends a large amount of time in your app has a better chance of being monetized. By segmenting and marketing to your most active users with paid-app upgrades and other opportunities to spend, you can greatly increase your revenue with an overall smaller investment.

3. Retention Rate

Retention rate is defined as the percentage of return users for a given app, calculated by dividing the number of users who return to the app daily by the total number of users from a given group (Kissmetrics). A high retention rate indicates that you’re delivering meaningful content to the right audience, resulting in more engaged users and, ultimately, higher revenue potential. However, pay close attention to how you define a return session. Push-notifications, messages and accidental visits to the app can skew data. Instead, the best approach is to select a certain length of time to be defined as an engaged return session (20 – 30 minutes) for more accurate data.

The inverse of retention – churn rate – is the percentage of users who do not return to the app over a given period of time. To calculate churn rate, you divide the number of users who have left by the total number of people who could have left (your entire user-base.) Churn rate is equally as important to evaluate as retention – through this data you’ll be able to see what segments of people are leaving your app, and hopefully delve deeper into why.

4. Daily Active Users/Monthly Active Users

Although it may seem like a no-brainer, the measure of how many users visit your app daily and monthly is important. For one, it provides insight into how sticky your app is. Are users returning to an app on a daily basis or sporadically throughout the course of a month? Do you have a really high daily download rate but low DAU? This may mean that something about your app is not encouraging users to return and should be addressed as soon as possible. With this metric, your goal is to shrink the gap between daily downloads and DAU. 

5. Cost Per Install (CPI)

Your Cost Per Install is the cost required to gain one install – usually related to paid ad campaigns. Most, if not all, of the ad networks you work with will provide this information up front. You should be calculating your desired CPI by taking into account your lifetime value. For example, if your customer lifetime value is higher than your CPI rate, your company is profitable. By knowing these numbers ahead of time, you will more wisely invest in advertising spend.

6. Average Revenue Per User (ARPU)

Your Average Revenue Per User (ARPU), the revenue you generate from each user on average, is very easy to calculate. Simply add up the revenue each month and divide by total number of users. One goal of your monetization strategy should be to increase ARPU over time. This metric is a stepping-stone to other metrics, such as Lifetime Value.

7. Lifetime Value

The lifetime value (LTV) of your users is a very important metric. Defined as the average revenue a user generates over their lifetime in your app, LTV helps calculate a lot of future company spending. For example, if the cost to acquire a user is higher than the LTV, your app will not be making money. Lifetime Value also helps you segment out your highest spending users, which is important when prioritizing their needs and determining the target audience in an effort to acquire more high-spending customers. To further simplify your analysis created the Customer Chronicle, which allows developers, customer service reps and other members of your company to delve into a user’s lifetime value across all of your apps. You’re given the option to view data points on an individual user level or segment the data for a bigger picture view.

Effectively analyzing your customer metrics will help you make educated, successful decisions for the future of your app – including your target audience, where to spend your marketing dollars and how to expand and update. The first step is understanding what your baseline is for each of these metrics. From there, you’ll want to regularly track these metrics to determine if your acquisition and retention strategies are moving the needle for your business.