What is retention rate?
Retention rate is one of the most important key performance indicators, or KPIs, for app and game developers, particularly those operating in the free-to-play realm and monetizing with ads. It gives valuable insights into how your app is performing and the overall user experience.
Retention rate refers to the percentage of users who install your app and return to play it, calculated on a specific day from the day it was downloaded (Day 0).
When should I measure retention?
When you measure retention is up to you — and varying this can lead to valuable information on your games performance. Typically, developers measure retention on:
This shows if you are effectively onboarding new users and will let you know what kind of first impression your app or game makes on people who have just downloaded it.
This helps determine how much people like your app — looking at drop-off from day one to day seven is a valuable insight into app performance and will help determine how long people will play your game or use your app.
At this point, expect your user base to have shrunk dramatically. Users remaining will likely be using your app regularly and are a valuable revenue driver — this is the ideal segment to target with in-app purchases.
Why is retention rate important?
You need users to return to your app in order to effectively monetize. This is a big challenge for developers and if you can get it right you’re well on the way to success.
By measuring retention rate, you can analyze when users stop interacting with your app and take actions to improve it — like new levels, features, or updates. This helps to increase lifetime value (LTV) of your users and grow your revenue.
Retention is also an important metric used to analyze LTV.
How to calculate retention rate
We have multiple ways to calculate retention rate, here are the most popular ones:
Classic Retention Rate:
Number of users who open the app on day (insert day) / Number of users who installed and used the app on day 0 * 100
With the classic retention rate, you can create a retention curve that will help you calculate LTV.
Using your daily active users (DAU) and monthly active users (MAU) can help you identify how many days in a month your average user interacts with your app. This is also called stickiness and is valuable to track over time to understand and predict the success of your app.
Learn more about good retention rates from our blog post.
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