4 Retention Lessons For a Successful Monetization Strategy
Free Book Preview Money-Smart Solopreneur
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
A year ago, I downloaded a fitness app and signed up for a month-long trial, following which I readily purchased an annual membership. The program itself was great, but it was more than that: the app featured helpful tutorial videos, sent me daily reminders and allowed me to post photos to track my progress. Today, my fitness goals are remarkably different, but the makers of the app have remained a step ahead with progressive engagement, customized programs, and useful new features. So I keep renewing my membership, which I will continue to do as long as I see value.
Building a great app is no longer enough in today’s increasingly competitive market. With 8.93 million apps available in app stores and rising consumer expectations, the competition for attention is fierce. And it’s only going to get more intense. More than 5 billion people, or 67 per cent of the world’s population, use a mobile phone today according to the Digital 2021 Global Overview Report by We Are Social and Hootsuite. That number will increase as mobile adoption continues to grow, in part, due to the rapid digitalisation fuelled by the pandemic.
This also means that the mobile app industry has enjoyed steady growth in the past few years. According to App Annie’s State of Mobile 2021 report, the number of mobile app downloads worldwide has grown 7 per cent year-on-year to reach a whopping 218 billion downloads in 2020. Consumer spending on mobile apps has continued to rise and is projected by App Annie to hit $156.5 billion in 2022, with the Asia Pacific region contributing to more than half of that amount.
In theory, this is great news and is the perfect opportunity for brands to monetize their apps. But, monetization poses a challenge even for the most successful apps: one misstep and everything can come crumbling down. So how can brands optimize their user engagement to reap the rewards of monetization? Here are four insights to keep in mind.
Make monetization the outcome, not the input
It’s easy to get excited about the money, but prioritizing monetization over your users when designing your mobile engagement strategy will leave you with neither. Monetization will naturally happen when loyal, paying customers are retained, so brands shouldn’t obsess over monetization and focus instead on using analytics to understand and engage users and optimize their app experience.
Identify the core user behavior within your app
Begin by understanding the core value propositions and problems that your users are looking to solve through your app. This will allow you to analyse their actions across different features of your app, pinpoint friction points in your conversion funnel, and identify where users might be dropping off.
While a wealth of insights and information can be derived from slicing and dicing user actions, it is important to remember that you cannot solve for everything. Start by narrowing down the key use cases that address your users’ needs and can be mapped to your offerings. Create distinct use cases to help you build differentiated offerings and engagement strategies.
For example, the data from an OTT/streaming media service may show that not being able to find shows users want to watch is causing customer churn. Analyzing user actions may also indicate that there are two user behaviors that we can help address: those who search for a particular show in mind and those who prefer to browse. Using the information gathered, the OTT service can decide to launch campaigns to communicate to these two types of users how to use a specific search function or engage in casual browsing using in-app features to find the perfect show for them.
Identifying and solving the core problems within your app that users face can increase customer engagement which will eventually lead to loyal paying customers.
Define the important metrics for your business
Tapping into the power of real-time analytics helps brands get a complete view of their users and engage them through optimized, personalized engagement strategies. However, brands need to be careful not to get overwhelmed by all the data available. Instead, they should be laser-focused and meticulous when it comes to identifying the metrics they want to analyze.
Try to avoid using vanity metrics like downloads and active users that do not paint the full picture of your app’s growth. Instead, use cohort analysis to figure out key concerns such as the number of repeat buyers your app has over a certain period of time, or the time it takes new users to uninstall your app if they do not take a certain action.
Understand the path to conversion
Ultimately, it’s all about your most valuable customers, so it’s important to understand the path each user takes to get to that point. That means tracking user actions and knowing how frequently users convert, and then engaging your customers meaningfully through highly targeted, hyper-personalized campaigns. This creates greater customer engagement and loyalty, and over time, it is these users who willingly convert into paying customers.
For example, Carousell discovered that tracking weekly active buyers and sellers was key to understanding the user journey and retaining customers. With this knowledge, Carousell started sending personalized recommendations via push notifications on a weekly basis, leading to better customer engagement which, by week three of the campaign, resulted in a 71 per cent increase in retention rate.
To overcome the monetization challenge, focus on driving more brand loyalty and customer lifetime value for your business. As the adage about the tree bearing fruit goes, nurture your customers before you can start thinking about monetizing your mobile app.