Essential app metric formulas that every mobile app needs
Most used mobile app metrics
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?
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 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 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)
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)
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)
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.
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.
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.
But how do I calculate my revenue? Qonversion.io collects this metric in seconds :)
Two main metrics used to calculate recurring revenue are MRR and ARR.
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.
Annual Recurring Revenue (ARR) – gives you a forecast of the company’s annual revenue. It’s often considered a rough benchmark for subscriptions, and investors, as ARR forecasts the revenue that has not yet been earned.
When to use MRR and when ARR?
MRR is considered to be a more useful metric to use in the subscription business as it’s more pragmatic. However, if your subscription is based on yearly or multi-year contracts, high contract value, and low volume, then ARR is a better choice for you (As your MRR can differ significantly)
Other important mobile marketing metrics, like ROI and ROAS, are considered with your returns from initial investments and expenses.
Return on Investment (ROI) measures the efficiency of an investment. But getting your ROI from a specific marketing campaign can be tougher than it looks. To do it correctly, define and measure the cost of the investment in a campaign and how these costs have impacted profits (might be tricky, as outside variables tend to lead to gains as well). You need to align what measures to pay attention to when making calculations.
To make the calculations more precise, use some statistics, and make control groups! This may help you see more clearly whether the mentioned campaign actually worked and increased revenues, or did the outside factors have more impact.
Return on Advertising Spend (ROAS) is a marketing metric that measures how efficient are your company’s digital campaigns. It helps your business to evaluate which marketing tactics are working and what can be improved in the future.
While ROAS is very similar to ROI, it looks specifically at the cost of an ad rather than the whole investment made.
One last subject we want to touch upon is conversions. For any mobile app company, the conversion of users into customers is the most important part of their business. This means moving people from trial or free subscriptions to a paying customer.
There are two conversions we’ll touch upon. First is Trial-to-Subscription mobile marketing metric. To find this metric, take the number of converted to final subscription trial events for time n and divide by the total trials started for time n. The metric should be calculated for a specific period of time which can be a week, month, quarter, and others.
The next one is Install-to-Trial Conversion. To calculate, take the number of started trials and divide it by the number of installs. The metric is calculated in percentages and can be limited to a specific time period, like 30 days.
In this post, we have covered the most used mobile app metrics. We started from the most simple ones as DAU and MAU, ending with calculations of returns on your investments. There are many more metrics that your business might be in need of. All of them can be piled up in Qonversion’s easy-to-use dashboard. You don’t have to worry about collecting all the analytics by yourself anymore! Our real-time dashboards allow you to power your marketing and attribution platforms, as well as product analytics and retention tools, with accurate in-app subscription data. All these mobile metrics and many more can be viewed in real-time to make further decisions about customer engagement.
Oh, and did we mention that we have multiple integrations? This will allow you to get any of the mobile app analytics metrics mentioned above and many more!