Understanding Math of the App Business - ARPU and LTV

Understanding Math of the App Business - ARPU and LTV

LTV Shoaib   00:08

In this post, we will discuss App revenue per user and Life time value as well as tips to help engaging and retaining current app users.  

Analyzing two more key metrics of an app business 

1. ARPU - Average Revenue Per User 

2. LTV Life Time Value of an App User, continued from previous topic . 

So Let’s get started!

TIP: Focusing on user retention gives a whole new set of opportunities for to drive user love.

4 – Average revenue per user (ARPU)

The average amount of money each customer contributes to the revenue from an app over a given period. ARPU is commonly calculated in monthly terms and by monthly active users. 

A simple math to measure your ARPU is as follows,

ARPU app metric formula:

In some cases it can also be done using total lifetime values, by dividing lifetime revenue of the app by total number of app users. 

For example: 

If your app has made $10,000 from in-app purchases since the launch / app has been used by 5000 people in total, 

ARPU = 10000/5000 = $2. [Total sales / Total number of app users.] 

Another version of this metric, ARPPU, can also be applied. 

It means average revenue per paying user, aimed at calculating the impact of paying users on the generated revenue. 

ARPPU = Revenue / Number of paying users.

5 – Lifetime value (LTV)

Lifetime value is considered by most to be the primary revenue metric. It represents the value of the app and how much each app user is worth during their lifetime. 

LTV revenue can be measured in a dollar amount, social sharing, articles read etc., and can be split by average monthly value or value per customer across all channels.

LTV formulas will help you assess the efficiency of your spendings to gain customers with the app. The main factor here is that LTV should be greater than 

CPA – cost per acquisition: 

Measuring lifetime value of a customer is aimed at figuring out how much profit you can expect from him (or a segment of customers) during the entire time.

Factors of the LTV equation include frequency of user transactions, the monetary value of those, and the time customers continue to interact. So a projected LTV might be equal to average value of a conversion multiplied by average number of conversions multiplied by average customer lifetime.

Example: 

The average in-app purchase is $5 x the average user makes 5 purchases a year x the average customer stays with your company for 10 years = $250 LTV per customer.

Next Topics to be covered:

 

*Last two metrics out of​ seven 

Key App Metrics of an App Business

1. What happens after you get customers to your app? 

2. How do you keep them engaged and turn them into loyal customers?

Hope you like and follow these useful tips. . .

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The Math of the App Business - Increasing App User Retention

The Math of the App Business - Increasing App User Retention

user retention Shoaib   22:42

Let's continue from our previous post last point remember? 

Let me remind it was 'The Math of the App Business', and next point I mean second out of seven metrics we were discussing is Monthly active users (MAU) Let's discuss that further . . .


2 – Monthly Active Users (MAU)

What MAU actually is it is the number of users having actively engaged with your app during the last month. Monthly active user is the coarse metric that highlights the main user base of the app. You can also track DAU – daily active users, to see more closely how truly indispensable the app is for those who have installed it. 

DAU – Daily Active Users:
DAU can be calculated for a specific day or as average over any time frame. Not diving into intricacies around the term “active users” lets depict it is commonly considered any app user who has launched your app at least once can be counted as an active user. For instance, if the app has been used 40,000 times by 10,000 people in the last 30 days, the MAU is 10,000. 

 3 – App User Retention or Customer retention

Retention rate equals to the total number of users within a set period of time divided upon the total number of users who engaged with the app in a previous period of time. 

So, when 500 new people from May used your app in June / 1,000 new people in May, your retention rate is 50%. AUR is the measurement of app’s ability to engage and maintain its customers over a period of time, commonly 1 month. 

Customer retention may differ by category, where as common statistics show an average 40% 1-month retention rate and a 4% 1-year retention rate. 

Average customer retention rates The retention metric is based on the frequency of app sessions – which is the act of a user opening the app. 

Contrary to the retention rates, there is also the “churn rate”, meaning the percentage of users who do not return to the app. Together with “user lifetime” metric (the average number of days a user spends interacting with the app), this set of app metrics is vital to understand what is actually happening in the app.

We will discuss rest of the points in our next post in details, so stay in touch for updates. For more Tips and Tricks Follow us on Twitter, twitter.com/saappsofficial 
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Understanding The Math Of The App Business

Understanding The Math Of The App Business

user retention Shoaib   00:40

App Marketing - The Math of the App Business 

Let's continue from our previous post last point remember? 

Let me remind it was 'The Math of the App Business', 

Why I selected last point first? You will understand if we go further into the discussion. . . 

Actually this topic covers all previous four listed in my last post in short you have to understand first the actual math of an App Business . . .


In 2016, app businesses predicted to generate $60 billion plus as far as revenues are concerned. Now . . . 

How to claim your stake with the help of understanding 'the math of the app business' ?

Let me guide you in a very simple manner, as we have already discussed in posts prior to this one that developing and launching an app is only the first step in a long journey of a fruitful app business. No matter how app business's success may be defined, the key metrics are vital to measure the app's performance.

Key App Metrics and Maths of An App Business can be understood with the help of following '7' Seven PIN POINTS as discussed below . . .

1. App Downloads Installs (AI)

2. Monthly active users (MAU)

3. App User Retention (AUR)

4. Average Revenue Per User (ARPU)

5. App's Lifetime Value (LTV)

6. Customer Insights & Personalization (CIP)

7.App Revenue (AR), actually  for which we all Apprepreneurs are eagerly waiting to be generated.

1. App Downloads and Installs (ADI)

As we might have a certain number of app users who have already downloaded our apps. But how many of them have actually taken step forward and installed it on their device, keep it and use it? Statistically, the average number of total downloads conversion to installations is mere 30%. And this metric is extremely crucial. X installs means X revenue. 

*The basic thing to track are daily app's installs and their sources. 
[Crucial Metric]

Analyzing the sources of installs are as important as the quantity of installs in actual. As we can easily evaluate our marketing strategy and advertising campaigns as well. Solely recommended by industry leaders to work with an independent analyzer of installs, thus eliminating a conflict of interest that comes with a tracking solution from an advertising network. 

Checkout services like MAT, Adjust or Google Mobile App Analytics.

We will discuss rest of the points in our next post in details, so stay in touch for updates.

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How to grow app or user retention?

How to grow app or user retention?

users Shoaib   17:02

How to grow app retention?

Would Increasing customer acquisition be truly the best objective for today’s mobile marketer? Perhaps not. 

Your app may get thousands of new downloads and installs every day, but how do these installs translate to your audience? 

How many of these will become active, engaged, and profitable customers of your app?

Downloads and installs say little about the true health of your app. According to our research, only 40% of customers continue to use an app they downloaded a month ago— and this number plummets to 4% over the course of the first year in the customer journey.

The challenge after getting a mobile app developed and launched is keeping the users interested in using the app after the first install.

Today we will learn that how can you keep those users interested in using the application. We will discover the ways of improving your retention rates to keep your user base steady and increasing.

What many mobile marketers don’t realize is customer churn can be largely managed with a few simple improvements to their app’s customer experience, and boosting retention doesn’t mean you have to completely reinvent the mobile app marketing wheel. 

Getting Started

Prior to improving the retention rate of your users, at first you need to make sure that you are keeping track of the retention rates.

Many analytics tools allow you to get a hint about user retention. Once you have gathered data to work with you are ready to begin. What would be a good time to track user retention well that depends on the type of app you have, certain apps need a lot of engagement of user like social network apps on the other hand an airline app won’t need that much engagement.

Steps before initiating

Before you start considering retention numbers are bad or good, you first need to understand that what would be the real use of your application and what would be its daily use percentage.

I usually go with different time frames to know about the retention rates, but it is totally up to you that how you decide to go with the analytics.

• 1-2 weeks after each major app update
• 1 month post download
• 1 week post download

It should be remember that comparison of retention rates with other products doesn’t help and there is no magic number at all that you should be going after, because a lot of things may affect the user retention which you might not be able to control. Just concentrate on your own analytics data and go with that, preventing following usage aspects, users have already disliked as sample stats shown below!

Conclusion

To be short just keep the analytics data of your application and initiate from there, then with the passage of time start experimenting with the retention rates by altering branding, product, marketing and by simply adding new features. 

We will continue talking about FIVE GREAT TIPS FOR Boosting Mobile App Retention in upcoming posts sooner so stay in touch

1. Launch a Voice of the Customer (VOC) Initiative, 
2. Use contextually relevant messaging and proactive engagement strategies,
3. Let users know you care, 
4. Give customers a reason to come back, 
5. Understand the math of the app business F.

For more Tips and Tricks regarding mobile app business and increasing your app revenues, Stay in Touch with us. . . 
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App marketing - How to up rank higher in appstores

App marketing - How to up rank higher in appstores

social media marketing Shoaib   02:24

How to up rank higher in App stores?

There are certain ways that a company can make its app rank higher in the appstores it is not an easy task but with the right amount of determination an app can reach the desired goal.

Here are some tips that will make your app rank higher in the stores:

• Look up the apps which are similar to yours and see where they stand and in which category they have been put under, and then find your app a similar category or one resembling to the category of the app, an app can be of more than one category however.

• Use the right title for your app as it would become popular among users due to its name so choosing a perfect label for the app will help the app in getting more recognition.

• Know your competition that who are you standing against, as it will make you more aware about the other apps feature that your app lacks or have.

• Go global and make your app available in the different markets of the world as it will help your app to get used by more people.

• Seek experts help in app store optimization, and learn the tips and tricks yourself so that you can bring a change in plan when you have the chance.

• Keep your app updated and try adding new features with every single update, and get your app tested before releasing it on the store.

• Get the bugs fixed in your app as no one likes an app with troubles.

• The most important thing is to analyze the progress of your app and see its everyday downloads number of reviews it gets and number of stars it gets as soon as a bug is pointed out by a customer check it out at the exact moment and let them know that the bug has been fixed with new update and he can update the app to get the trouble free experience.

That is it with these tips your app will get the ranking it deserves.

Hope you like and follow these useful tips. . .

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