Across all industries and as of the second half of 2018, 71% of all app users churn within 90 days. This high churn rate is very disturbing and frustrating to businesses taking into consideration that it can cost five times more to convert a new customer than it does to retain an existing one.
The customer churn rate is obtained by dividing the number of customers you lost in a quarter by the number of customers you had at the beginning of that quarter. It’s a very important metric in understanding whether your company is experiencing a high customer churn rate.
If you are surprised why your brand should be concerned about apps churn rate, users connected to iOS and Android devices spend 86% of there time on apps while they spend only 14% on browsers.
What then are these 3 causes of high churn rates in apps?
1. Lack of qualitative value
Why you use an app is because you want to solve a particular problem and if that problem persists, you may want to reconsider your initial decision. Meanwhile, the following apps are assessed based on what they do well,
- Uber – Helps people reliably secure transportation.
- Waze – Helps people to assess the fastest routes when driving.
- Whatsapp – Offers the opportunity for a free and secure global messaging.
- Tinder – Simplifies the process of finding “dates.”
- Instagram – Provides a visual experience specifically for sharing pictures.
In the case of OkCupid, it’s dating app initial splash screen looks great and is well-designed. It has a clear value proposition and an easy-to-find call-to-action, but what about the quality of service, does it really do what it says?
In order to use the app, you are given two options. While the first option is a Facebook sign-in, the other is to use a personal email address.
Many users choose Facebook logins as it can streamline not just signup, but the setup of dating mobile apps (as users can automatically import details, photos, and connections). After seven clicks, however, to log in with Facebook and confirm one’s identity, the user encounters a problem.
What you may, however, experience with this OkCupid app is an inability to connect to Facebook and you will still have to provide an email you didn’t want to bother yourself with at the initial time. Where some apps have greatly simplified their signups, OkCupid forces users into a stressful onboarding experience as well as a more lengthy profile configuration.
2. Antiquated models
One contributory factor to the high churn rate in apps is the refusal by businesses to update. The fact that there is stiff competition in the apps world makes it mandatory that you should constantly upgrade your services to the next level.
A study discovered that the top 100 apps in either the play or app store are updated much more frequently than the average app, and apps with older versions are correlated with lower ratings. It’s, therefore, absolutely vital you continue evolving and renovating what your app offers to new and existing users in order to stay relevant in the market and stave off churn by value stagnation.
3. User experience (UX)
The first experience a user garners from your app leaves a lasting imprint that tends towards retention or churn, this is very important because every single user has to pass through this stage. According to Oracle’s study, almost 9 in 10 customers have abandoned a business because of previous poor experience, while brands who onboard efficiently see an increase of about 500% in customer lifetime value (CLV).
To reduce or totally fend off churn rate in apps, you need to do the following.
1. Customer’s onboarding experience is the key
Having been able to establish the reasons for the 80% churn rate in apps by the end of Q1 the app users signing up, it’s extremely important that you set out from the onboarding stage to avoid this catastrophic condition. New sign-ups must be guided on what to do with the expectations that it will be get done efficiently.
Working on doing things efficiently and as promised,
- Uber – Delivers on its promise of helping users find reliable transportation by recruiting qualitative as well as enough drivers, thereby, ensuring that users secure rides within 3 minutes and 8 seconds, 24/7.
- Waze – Delivers on its promise of finding drivers the fastest routes by amplifying its experience through ensuring that users contribute real-time information and little tidbits on road updates.
- Tinder – Delivers on its promise of simplifying the process of finding a date by making it as easy as swiping right and if they swipe right back, the two of you will become a match.
You must endeavor to develop a comprehensive view of the users and link that view directly to results. The information you need have in their datasets include customer profiles as well as product, offer, usage, and rebate history, and they include data from call centers, weblogs, network experience, pricing, and promotions.
2. Ensuring a subscription-based model
Running for Weight Loss uses subscriptions and ads.
It’s believed that businesses have to dip a lit bit into their pockets to enhance a subscription-based model but being assured of a steady monthly, quarterly, or yearly retention of customers doing away with the much-dreaded churn is a good price to pay for whatever the assumed cut may be.
When you offer annual subscriptions which comes with a discount, You have successfully given a lifeline to your business by safeguarding your cash flow if for any reason you have to go through a monthly churn. It, to a very large extent, reduces your customer acquisition cost (CAC) while at the same time increases your customer lifetime value (CLV).
A study by VisionMobile study showed that subscription-based apps earned 2-3 times more per user than apps that relied on advertising or a pay-to-download model, while also earning nearly 50% more than apps relying on in-app purchases for revenue. Users are happier when they are assured that your content is valuable to them and is updated on a regular basis which is best brought about by subscription.
Many apps will gladly offer discounts for users who commit to 6 or 12-month subscriptions. Users will always want to save money whenever they can and often grab at the opportunity of subscription to enhance opting for the lower price plan with the extended commitment, and with the assurance of a steady source of revenue, app developers can make reliable revenue projections.
At the end of the day, nothing can be more heartwarming for an entrepreneur or a business owner than to be assured that the products being churned out from the mills are virtually already sold and nothing can as well be more alluring to a consumer than to have more, for less.
It’s true that nearly any app can attempt a subscription model, it’s, however, best suited for content and service apps, while it may not be suitable for a single purpose, gaming, and shopping apps.
While churn may be generally considered a poor index of a company’s performance it’s, however, really a metric that shows how well you’re managing your customer relationships. A high churn rate though is the result of poor customer acquisition efforts.
On the other hand, churn should not be viewed as outrightly bad. There are situations where unprofitable or uncooperative users churn. A thorough understanding of the user’s journey and the application of analytics to segment users can help you discover which customers should churn and those that are valuable that you need retaining.