Which app metrics are important and why

After the app is brought to the market, it’s crucial for the developers to monitor relevant metrics, interpret their values, and engineer informed marketing and product strategies based on the statistical insights. This text will guide you through the most influential indicators to supervise.

Advertising and attribution

On top of the customer journey across your product are advertising campaigns. But which parameters you need to keep track of while planning paid promotion?

Those are:

• Click-through Rate, or CTR, which reflects the quality of your ad and creative;
• Cost Per Mille, or CPM;
• Cost Per Click, or CPC;
• Click-to-install Conversions.

Analyzing all these will let you assess one of the critical indicators of your ad campaign — Cost Per Install, or CPI. Since this metric is one of the cornerstones of any campaign, you will not be able to successfully promote your app unless you have figured out how much it costs you to acquire a user who launches your product at least once.

It’s essential that you accurately evaluate the cost of every installation—for a certain campaign or traffic source—so you can realize which ad spaces deliver results and which do not.

The process of identifying a source from which traffic comes to a website or app is called attribution. Proper attribution will help you gain vital information about everything a user does on the way to your app: from clicking on an ad to registering and making a purchase. Attribution practices are closely tied with a plethora of difficulties and catches, and you have to at least be aware of them and at best take them into account in your analytics.

Retention

Well, the user has installed your app with interest. Here’s where the analytical process starts. Everything that your app has under the hood is extremely valuable to you as the owner.

One of the most important internal metrics is retention. Users return to the app if they like it, find it helpful, and make use of its functions. Vice versa, they disregard the app if they cannot understand what it is for, if it glitches or looks ugly.

Retention is an unmistakable indicator suggesting your app’s functions are effective and you have reached the right audience. It’s retention rate that reflects the potential number of loyal users and your opportunities to ramp up the app’s revenue and lifetime value — the total revenue a business can expect from a single customer.

Most developers measure the retention rate before the 30th day (it’s not always a correct practice, but we’ll cover it in a dedicated article). Here are the iOS apps market’s average retention rates:

Retention is indirectly associated with audience metrics, such as Daily Active Users (DAU), Monthly Active Users (MAU), Stickiness (DAU/MAU—the percentage of users who returned to the app). Of these, DAU is more subject to chance, MAU less. Actually, these are quantitative indicators that bear very little valuable information about real app performance.

Imagine your MAU rose from 100 to 200 users last month. Is it bad or good? For a spherical app in a vacuum, it might be good. But considering you purchased those 100 users on Facebook, for 10 bucks per install, and their retention rate only amounted to 10% on the first day, it’s clear you have wasted 900 dollars only to see a higher MAU, which doesn’t speak for actual success.

Calculating earnings

What metrics you really need to pay attention to are Cost Per Action (CPA), Average Revenue Per User (ARPU), Average Revenue Per Paying User (ARPPU), and lifetime value (LTV). Generally,

LTV = Revenue from user – Acquisition and retention costs

In fact, LTV is the pillar stone of app marketing and app development business as a whole.

Marketers use this metric to estimate how much they can spend to acquire a user and stay in the black. As the volume of organic traffic falls and importance of paid promotion campaigns springs up, measuring LTV and making further decisions based on these findings determines the app’s success (or failure).

Even at the planning phase, forecasting LTV will help you choose the marketing line and strategy; as the product grows, LTV will guide your team toward informed decisions both on the product itself and cash-in methods.

Lifetime value deserves more attention and discussion, but the central idea is that you need to continuously monitor the value your users generate and do your best to make the user acquisition cost lower than LTV. Otherwise, you will waste your money for good.

If in our previous case LTV would amount to 20 dollars, that would mean that you did not waste 900 dollars but earned 1,000. This brings us to the fact that one metric cannot give you the whole picture.

Lastly, you can measure virality—the so-called k-factor that reflects the number of organic users one new user leads to your app. This is not the metric that is appropriate for benchmarking, but the k-factor will be very helpful if you monitor it in real time and figure out the reasons behind its rises and falls. Make sure the k-factor is larger than churn: if it is, your app will see exponential growth; if it’s not, you will progressively lose your audience.

App metrics as essential marketing tools

As you might have already guessed, there is a multitude of app metrics to consider and monitor.

What you need to do is determine the most relevant ones, monitor them continuously and persistently, find out the mean values for your category, platform, and country, and your current numbers, and improve your product.

Mobile analyst is big of a profession. Having delved into it, you will explore an entire world of figures, formulas, and relations. But you have to go this thorny way if you want to capitalize on your product.