Essential App Metric Formulas That Every Mobile App Needs

Analytics

Nov 20, 2020

Alice

Essential App Metric Formulas That Every Mobile App Needs

Analytics

Nov 20, 2020

Alice

Essential App Metric Formulas That Every Mobile App Needs

Analytics

Nov 20, 2020

Alice

Essential App Metric Formulas That Every Mobile App Needs

Analytics

Nov 20, 2020

Alice

Essential app metric formulas that every mobile app needs
Essential app metric formulas that every mobile app needs
Essential app metric formulas that every mobile app needs
Essential app metric formulas that every mobile app needs

If you work with mobile apps, using the right metrics is essential for your business to flow. The biggest question that may arise is: what mobile app performance metrics matter the most?

Well, this post will help you with that! Our team has compiled the most important app engagement metrics. They are commonly used when trying to understand how well your app is doing and what mobile marketing tactics to use to increase customer retention.

Let us start with the most common metric formulas, which are DAU and MAU. 

If you work with mobile apps, using the right metrics is essential for your business to flow. The biggest question that may arise is: what mobile app performance metrics matter the most?

Well, this post will help you with that! Our team has compiled the most important app engagement metrics. They are commonly used when trying to understand how well your app is doing and what mobile marketing tactics to use to increase customer retention.

Let us start with the most common metric formulas, which are DAU and MAU. 

If you work with mobile apps, using the right metrics is essential for your business to flow. The biggest question that may arise is: what mobile app performance metrics matter the most?

Well, this post will help you with that! Our team has compiled the most important app engagement metrics. They are commonly used when trying to understand how well your app is doing and what mobile marketing tactics to use to increase customer retention.

Let us start with the most common metric formulas, which are DAU and MAU. 

If you work with mobile apps, using the right metrics is essential for your business to flow. The biggest question that may arise is: what mobile app performance metrics matter the most?

Well, this post will help you with that! Our team has compiled the most important app engagement metrics. They are commonly used when trying to understand how well your app is doing and what mobile marketing tactics to use to increase customer retention.

Let us start with the most common metric formulas, which are DAU and MAU. 

What is DAU?

What is DAU?

The abbreviation stands for Daily Active Users – it’s a metric that shows how many individuals are using your app daily. It specifically counts the unique users of your app, without accounting for the number of times a person opened the app or the number of sessions he had in the last 24 hours. 

Monthly Active Users (MAU)

Is practically the same as DAU, only it counts the number of users in a month or the prior 30 days.

Okay, we have established how you can calculate your unique users for a specific period. But how do I know my revenue per user? Or the lifetime value of customers?

We’re here to help you with that as well. First, let’s focus on Retention Rate and Churn Rate.

Retention Rate

Retention Rate

Retention Rate measures how many users stay within the app over a specific period of time. Retention is critical because companies invest sales and marketing dollars in acquiring new users. Retention metrics can show you whether an app needs to be modified or if the last update was a success.

Churn Rate

Churn Rate

Churn rate is the opposite of the retention rate and can be found by subtracting the RR from 1. Churn is when customers decide to delete the app, stop using the premium subscription, or decide to downgrade to the free version. It is important to keep in mind that Churn Rate is ALWAYS measured over a specific period in time!

Let’s talk a bit more about acquisitions. Two other important metrics that are commonly used are Cost Per Acquisition and Customer Acquisition Cost. 

Cost Per Acquisition (CPA)

Cost Per Acquisition (CPA)

CPA is perfect to use when your app already has a stable customer base and you are planning to gain more customer attention. This metric calculates the cumulative cost of a customer taking any action that later leads to conversion – essentially whether the campaign or marketing tactic was worth its money. The higher the CPA, the worse your campaign did, so try to stay low on this metric!

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

An app’s CAC is the total sales and marketing costs required to earn a new customer over a specific period in time. It is your potential cost of turning a lead into a customer. CAC specifically measures the price of acquiring a customer, whereas CPA measures the cost to acquire something that may not be a unique user – a registration, trial, lead, etc.

CAC with LTV is a frequently compared metric in SaaS. It helps you to see the company’s growth, expenses, predict the future moves, and recognize places for expansion.

Lifetime Value (LTV)

Lifetime Value (LTV)

LTV is an important mobile metric to assess whether your customers generate enough value for the company before they decide to churn. Keep in mind that LTV should be higher than CAC (customer acquisition cost) unless you want to lose money. There are multiple ways to approach LTV, but the main point in all of them is to figure out how much profit you can expect to receive from the average customer. The metric helps you to balance the customer acquisition spend and to determine the length of the payback period. For more details about LTV, click here.

To make your life easier when calculating LTV, use Revenue Cohorts which we perfectly explain here

Subscriptions Cohorts

Subscriptions Cohorts

You might want to take a look at subscriber cohorts as well. Why are they useful? They allow you to see for how long your app retains customers as well as divide subscribers into unique groups to use specific marketing tactics to improve your app performance and reach the KPIs. It’s important to not only focus on revenue cohorts. While your revenue may stay the same, the number of users can actually change, leading to lower or higher ARPU, an increase in churn, and other metric changes.

ARPU

ARPU

An important mobile app KPI that is used in cohorts is ARPU. The abbreviation stands for Average Revenue Per User – this metric is linked to the customer’s lifetime value and allows you to see revenue per user since launch. Simply divide the total revenue by the number of users you’ve had. 

Want to know how much revenue does a paid user brings on average? Use the Average Revenue Per Paid User formula.

Recurring Revenue

Recurring Revenue

Monthly Recurring Revenue (MRR) – an averaged monthly subscription revenue. MRR is mainly used to calculate the Net MRR Growth rate – month over month increase in MRR. This app metric indicates the overall growth in revenue in SaaS businesses.