“What can be measured can be improved,” said Peter Drucker, the father of modern management theory. But what exactly does a startup measure in its product? How do you differentiate actionable, fact-based mobile app launch metrics from “vanity metrics” that can only flatter a developer’s vanity?
And most importantly – why?
The answer is simple: then, to identify the strengths and weaknesses of your product. You will never correct the latter if you collect erroneous data or process correct data in the wrong way. In order not to ruin your startup at the very beginning, we recommend tracking 5 key performance indicators of a mobile application from our article. But before moving on to them, we recall that any company needs to first of all monitor financial metrics, including:
- Fixed and variable costs;
- Cash balance;
- Capital burnout rate;
- Break even;
- Cash flow;
- Profit.
1. Average income from one user and the total profit from cooperation with him
Total profit per client – one of the main indicators of the success of your chosen business model. When applied to mobile development, it speaks about the financial value of your company, showing how much each user contributes to it throughout the entire time of interaction with the application. Josia Humphrey of Appster proposes to predict the total revenue per user by multiplying the annual cost of services (for example, an app subscription) by the number of years that you think the user will stay with you. For example, if, on average, your client spends 1,200 rubles a year and uses the application for 5 years, then the total profit from it will be 6,000 rubles.
In the case of startups, this formula may not work due to the lack of sufficient data. Therefore, instead of your own statistics, you can use the statistics of the closest competitors in order to understand which indicator you need to strive for. In any case, entrepreneurs agree that in order to ensure the company’s profitability, the total profit per user must exceed the cost of attracting it at least three times.
Average revenue per user (ARPU) Is a metric related to the purchasing behavior of your audience. It is needed to analyze the source of the company’s income. Including, its changes from each new installation of a mobile application or a purchase made in it. From this metric, investors draw conclusions about the potential profitability of the project, and developers – about its shortcomings. Overall, increasing both metrics along with expanding your user base is in your best interest.
2. The cost of installing the application and the cost of a loyal user
Installation cost (CPI) Is the amount you spend to get one person to install your mobile application. You advertise in various media to increase installs and pay a fixed or floating rate to install the app. Organic installs are not included in this metric.
The install cost is calculated as the ratio of the advertising campaign budget to the total number of app installs. For example, if you spent 300,000 rubles on advertising and got 1,500 installs, then the cost of one will be 200 rubles. Loyal User Cost (CPLU) Is the amount you spend to get a “loyal” or “active” user who has logged into the application more than three times.
This metric shows how much you should spend in order to reach an audience that actually uses your app after installation. In conjunction with the average income per user, it will help you calculate:
- Return on Investment Ratio (ROI) – the ratio of funds earned to invested funds;
- The break-even point is the number of mobile app installations at which the sum of the company’s fixed and variable costs is equal to its income. When it exceeds costs, you start making a profit.
Fiksu DSP statistics at the moment are as follows:
- The average cost of a loyal user in the mobile app market is $ 2.51;
- Average cost to install an iOS app – $ 1.88
- The average cost to install an Android app is $ 2.42.
3. Audience retention
Today, more than 6 million mobile applications are available in the Google Play and App Store. However, users spend almost 85% of their time on smartphones on just 5 of them. And the likelihood that your application will be removed after 72 hours of use and never installed again is 4 out of 5. This means that people are content with a small set of favorite applications and are not inclined to expand it. Obviously, in such conditions, audience retention is becoming a serious problem, especially for mobile startups. Apptentive estimates that only 4% of iOS and Android users have been using the same mobile app for over a year. Josia Humphrey of Appster believes that “the moment you get a new user, you should do your best to ensure that they stay with you as long as possible.”
Inc.com and Molly Galetto define the term “audience retention“As” the company’s ability to build and maintain long-term relationships with as many customers as possible. ” But why keep users on a mobile app? Alex Waltz is sure that knowledge of this indicator is an excellent indicator of the success of the application and the number of its real users. Based on this data, you can improve your marketing strategy and make the promotion of the application more targeted, as well as calculate the total profit from cooperation with each client and the total income of the company.
4. Audience engagement
Involvement – not an empirical indicator. It can be assessed by tracking and collecting various data:
- the duration of the session;
- preferred ways to interact with the application;
- the number of transitions to the application via push notifications;
- the total number of screens viewed per session.
Engagement is important because it speaks to the quality of a mobile app, complementing quantitative assessments. Active users not only increase audience retention and total profit, but also contribute to the viral spread of the application through social networks. Therefore, the largest mobile apps like Facebook have a very high engagement rate.
We discussed the issue of engagement in more detail in an article on this topic.
5. Consumer loyalty index
Consumer Loyalty Index (NPS) Is one of the most effective indicators of user satisfaction and mobile app virality. It can be measured by asking the audience the following question: “On a scale of 0-10, what is the likelihood that you will recommend our app to friends, colleagues and family members?” If you want to know the reasons for this or that attitude towards your product – ask one more question, but no more.
An article about the features of creating applications for android help to develop a product that satisfies users as much as possible applications on this OC…
Based on the answer, Netpromoter.com categorizes users as follows:
- “Distributors” – put 9 or 10 points, ready to make purchases in your application and support it in every possible way.
- “Passive consumers” – they give 7-8 points, they are satisfied with the work of the application, but they may well go to your competitors.
- “Critics” – put below 6 points, are not satisfied with the application and can ruin the reputation of your brand, leaving negative reviews on the Internet and in life.
The final consumer loyalty index is calculated as the difference between the number of “critics” and the number of “distributors”.
Whatever the outcome, it will give you an idea of the audience’s impression of your app and help you:
- understand if your product meets market demands;
- measure the value and viral potential of the application;
- evaluate whether users want to share your application with other people, making them your potential customers.
On the site, you can leave a request for the development of mobile applications in Moscow and Russia (if you are from another country – also write), and in the blog you can find out about the prices of developing an application for android and ios.
