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Key Metrics for Evaluating Mobile App Performance in 2023

GOOVER DAILY REPORT September 10, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Introduction to Mobile App Metrics
  3. Key Mobile App Metrics
  4. Understanding the DAU/MAU Ratio
  5. Monthly Active Users (MAU) as a KPI
  6. Conclusion

1. Summary

  • The report titled 'Key Metrics for Evaluating Mobile App Performance in 2023' explores essential metrics vital for gauging mobile app performance, focusing on retention, engagement, conversion, and revenue generation. Key metrics discussed include Cost Per Install (CPI), Customer Lifetime Value (CLTV), Average Revenue Per User (ARPU), Daily Active Users (DAU), and Monthly Active Users (MAU). The report categorizes these metrics into acquisition, engagement, conversion, and performance sections, offering insights into assessing marketing efforts and return on investment (ROI). Special attention is given to the DAU/MAU Ratio, highlighting its importance in measuring user retention and app stickiness. The findings aim to assist app developers and marketers in making data-driven decisions to enhance user experience and business outcomes.

2. Introduction to Mobile App Metrics

  • 2-1. Importance of Mobile App Metrics

  • Mobile app metrics are critical for understanding the performance of an app after it has been published on platforms like Google Play or the Apple App Store. These metrics help app developers and marketers gauge whether their objectives regarding retention, engagement, conversion, and revenue generation are being met. Tracking metrics is essential because while app downloads provide a good starting point, they can be misleading; statistics show that 80-90% of apps are used just once and subsequently deleted. Therefore, identifying which metrics are relevant to a specific business is vital, as different industries may have different benchmarks for success.

  • 2-2. Objectives: Retention, Engagement, Conversion, Revenue Generation

  • The primary objectives of evaluating mobile app metrics include retention, engagement, conversion, and revenue generation. Each of these objectives plays a crucial role in the overall success of a mobile app. Retention focuses on understanding how many users continue to use the app over time, while engagement measures how actively users interact with it. Conversion metrics track the effectiveness of the app in turning users into paying customers or fulfilling other desired outcomes, and revenue generation assesses the financial viability of the app. This comprehensive view of metrics aids in decision-making and helps in evaluating the app's contribution to broader business goals.

3. Key Mobile App Metrics

  • 3-1. Cost Per Install (CPI)

  • Cost Per Install (CPI) represents the average amount of money spent on acquiring each install of your mobile app. It is calculated using the formula: Total Marketing Cost / Total Acquired Users. For instance, if an app spends Rs 100,000 on marketing and acquires 100 new users, the CPI would be Rs 1,000. A crucial aspect of CPI is ensuring it remains lower than the Customer Lifetime Value (CLTV); if not, it signals potential financial loss.

  • 3-2. Customer Lifetime Value (CLTV)

  • Customer Lifetime Value (CLTV) estimates the total revenue a business can expect from a single customer throughout their relationship with the business. It is calculated by multiplying the Average Value of Conversion with the Average Number of Conversions over a specified period and the Average Customer Lifetime. For example, if an average user spends Rs 500 and makes three purchases over two years, the CLTV would be Rs 3,000. A higher CLTV than the CPI is necessary to ensure that user acquisition is profitable.

  • 3-3. Average Revenue Per User (ARPU)

  • Average Revenue Per User (ARPU) quantifies the revenue generated per user, typically calculated as Lifetime Revenue divided by the Number of Users. For example, if there’s a total revenue of Rs 50,000 from 100 users, the ARPU would be Rs 500. This metric is essential for assessing if the generated revenue meets monthly targets and can help identify potential gaps in revenue generation.

  • 3-4. Daily/Monthly Active Users (DAU/MAU)

  • Daily Active Users (DAU) and Monthly Active Users (MAU) are critical metrics to determine user engagement. DAU tracks the number of unique users who engage with the app daily, while MAU assesses unique users over a 30-day period. With 28% of apps uninstalling within the first 30 days, maintaining a high DAU and MAU is vital for understanding user retention and app engagement levels. Trends in these metrics can provide insights into user behavior patterns.

4. Understanding the DAU/MAU Ratio

  • 4-1. Definition and Importance

  • The DAU/MAU Ratio measures the stickiness of a product, indicating how often users engage with it. Specifically, Daily Active Users (DAU) counts unique users who engage with a product within a single day, while Monthly Active Users (MAU) counts unique users who engage over a rolling 30-day period. This ratio is crucial as it provides insight into user retention and engagement levels, which can be a proxy for revenue growth, especially for startups.

  • 4-2. Calculation and Benchmarks

  • To calculate the DAU/MAU Ratio, divide the number of Daily Active Users (DAU) by the number of Monthly Active Users (MAU). Defining what constitutes an 'active' user is key, which may vary based on the product. Common definitions include purchases, content views, or logins. Industry benchmarks suggest that a DAU/MAU Ratio between 10-20% is typical, with firms achieving over 50% being rare.

  • 4-3. Limitations and Complementary Metrics

  • While the DAU/MAU Ratio provides valuable insights into product engagement, it has limitations. It does not distinguish between users who are retained versus those who churn. Therefore, it is recommended to conduct cohort retention analysis to gain a deeper understanding of user behavior. Tracking other related metrics, such as the DAU/WAU Ratio, can also provide additional context and enhance the evaluation of product performance.

5. Monthly Active Users (MAU) as a KPI

  • 5-1. Definition and Calculation

  • Monthly Active Users (MAU) is defined as the number of unique users who engage with a platform over a 30-day period. Engagement is a key aspect, which means users must perform some form of action – such as liking a post, making a purchase, or watching content – rather than merely opening the app or website. Each platform may define these actions differently, but the core principle remains consistent: an active user is one who interacts meaningfully with the platform within the given time frame.

  • 5-2. Impact on Company Valuation

  • The size of a company's active user base significantly impacts its valuation, particularly for social media and technology startups. MAU figures are crucial as they reflect the platform's growth potential and revenue opportunities. A larger active user base implies more opportunities for monetization through ads and user-generated revenue, leading to higher company valuations. Investors often analyze MAU figures to assess a platform's appeal and performance in the digital marketplace.

  • 5-3. Strategies to Boost MAU

  • To increase Monthly Active Users, companies can implement several strategies: 1. **User-Friendly Design and Experience**: Enhance the user interface (UI) and experience (UX) to make platforms more intuitive and engaging. 2. **Regular and Relevant Content Updates**: Provide fresh and pertinent content to encourage users to return. 3. **Personalized User Experience**: Tailor interactions, recommendations, and content based on individual user preferences to foster engagement. 4. **Gamification**: Introduce game-like elements to stimulate user interaction. 5. **Push Notifications and Reminders**: Send timely alerts about new content or features to keep users informed without overwhelming them. 6. **Community Building**: Create spaces for users to interact and share, fostering a sense of belonging that encourages ongoing engagement.

6. Conclusion

  • This comprehensive report underscores the significance of metrics like Cost Per Install (CPI), Customer Lifetime Value (CLTV), Average Revenue Per User (ARPU), Daily Active Users (DAU), and Monthly Active Users (MAU) in evaluating mobile app performance. The emphasis on the DAU/MAU Ratio and MAU helps elucidate critical aspects of user engagement and platform vitality. These metrics' importance lies in their ability to provide actionable insights that can drive sustainable growth, optimize user experience, and bolster business success. However, the report also stresses the necessity of supplementing these metrics with deeper analyses, such as cohort retention studies, to fully understand user behavior and app performance. Future developments could see a refinement of these metrics and more advanced analytics tools to further enhance app evaluation efficacy. Practically, companies are encouraged to integrate these metrics into their strategic planning and marketing efforts to achieve robust growth and improved ROI.

7. Glossary

  • 7-1. Cost Per Install (CPI) [Metric]

  • CPI measures the cost associated with acquiring a new user who installs the app. It is crucial for evaluating the efficiency of marketing campaigns and understanding customer acquisition costs.

  • 7-2. Customer Lifetime Value (CLTV) [Metric]

  • CLTV represents the total revenue expected from a customer over their lifetime. This metric helps businesses understand the long-term value of their user base and guides strategic decisions on marketing and customer retention efforts.

  • 7-3. Average Revenue Per User (ARPU) [Metric]

  • ARPU calculates the average revenue generated per user and helps in assessing the monetization efficiency of the app. It's a vital metric for understanding financial performance and growth potential.

  • 7-4. Daily Active Users (DAU) [Metric]

  • DAU counts the number of unique users engaging with the app daily. It's a key indicator of app stickiness and user engagement.

  • 7-5. Monthly Active Users (MAU) [Metric]

  • MAU captures the number of unique users who interact with the app within a 30-day period. It is a fundamental KPI for assessing the overall health and user engagement of the app.

  • 7-6. DAU/MAU Ratio [Metric]

  • The DAU/MAU Ratio measures user stickiness by comparing daily active users to monthly active users. A high ratio indicates strong user retention and engagement.

8. Source Documents