Marketers love acquisition. It’s fun, it’s easy to measure, and the benefits are obvious. I mean, more users - right? More users equals more money equals success. So let’s spend more money and get more users and succeed.
Sure it costs a lot of money, but guess what? Marketers REALLY love spending money. Perhaps if we spend enough we can employ a media agency and get to enjoy some really good coffee and cookies when we visit. Hell, we might even get a game of pool or pinball out of the deal!
Well, I exaggerate. But only a little. The world remains plentifully supplied with organizations that nod like sages when told that the focus must move away from acquisition and towards customer service and retention… and then leave the room, read about ‘header bidding’ or some other such revolutionary technology, and begin the acquisition splurge all over again.
In the context of the mobile app, that can be fatal. Mobile businesses depend on getting and keeping users. And the install of the app isn’t the end of the journey; it is only the beginning. True success comes from nurturing mobile relationships and turning installs into long-term revenue.
If any of the above sounded familiar, here’s a quick sum that might help cure your ‘acquisition addiction’.
Take the number of new app users you acquire in a month. Divide it by the number of users who churned - i.e. stopped using your mobile service - from month to month*. That gives you your ‘leaky sieve’ number. And here’s how to interpret the results:
- If your number is greater than 2, or a negative number, congratulations. Go to the top of the class, keep spending on acquisition, and enjoy the coffee and cookies.
- If your number is somewhere between 1 and 2 you may allow yourself a small pat on the back. Take a close look at your acquisition spend and ask yourself whether some of that cash might be better focused on delivering outstanding, personalized experiences and in-app campaigns that drive conversion and retention.
- If you’re between .5 and 1 it’s time to think some deep thoughts about whether your acquisition spend is truly appropriate, and look immediately at post-install experience and mobile campaigns.
- And if your number is less than .5 - shut down acquisition immediately, pick up the phone and talk to us.
This may sound overly simplistic, and of course it IS true that every specific business is different. But sometimes looking at one single number helps focus the mind. At the very least, every organization should track this number month to month and keep an eye on any developing or emerging trends.
The beauty of this number is that it doesn’t just help you figure out if you have a retention challenge, it also gives you a single number that - when it gets too low - tells you that you’re in the process of burning money on acquisition when your app isn’t sticky enough to hold them.
Every mobile business needs to know this number, and track it monthly. You need a target that’s right for you and you need to flex acquisition and retention efforts until you hit it. It’s the first step toward taking a rational view of how resources are allocated to maximize ROI.
*Calculating churn in this way isn’t, of course, an entirely accurate way of establishing how many users have left your app never to come back. It does however have the major benefit of being consistent. That said, if your users typically only visit once every three or four months, you can probably be a little more generous when interpreting your results.