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Five Crucial Metrics to Track Your App’s Success

5 Crucial Metrics To Track Your App’s Success

1. Lifetime Value (LV):

This is one of the most important metrics for your app. It is the primary revenue measurement metric, that takes into account the value of each individual customer, and helps you decide whether or not you’re paying a good price for each customer from a financial standpoint.

So how do you zero in on a value point for customers? This metric is influenced by a number of factor, such as customer demographics, age, time of engagement (for example, if your app is for college students, then the set of customers you have now will not remain with you after three or four years), frequency of transaction and so on.

Lifetime Value or LV can be calculated ether as average monthly value of all customers, or average value per customer.

LV = (Average value of a transaction) x (Average no. of transactions for the given time frame) x (average value of the customer lifecycle)

2. Retention Rate (RR):

Mobile apps – especially those built by companies or corporate entities – are released on the App Store and on Google Play with a whole lot of fanfare and publicity. This generally drives a large number of initial users, but the biggest challenge is in getting them to stick around. There are several factors to consider here – Some users may download the app and never use it, some may come from referral traffic or through affiliate marketing and find that the app does not concern them in any way, and some may simply be unimpressed with the app, and stop using it. For these and other scenarios, retention rate is a handy metric to keep track of how well your app is doing.

Retention Rate can be calculated as follows:

RR = [(No. of customers on your app currently) / (No. of customers on your app during a previous timeframe)] x 100

Your timeframe could be a month, six months, a year, or anything else depending on the nature of your app.

Taking the example of a one-month timeframe: If you have 800 customers this month, but had 1,000 last month, then your RR is 800/1000 = 80%.

3. Cost Per Acquisition (CPA):

As mentioned in the previous point, it isn’t easy getting spreading news of your app to customers, so they can download it. Whether through online marketing, paid campaigns, billboard advertising, referral traffic or other sources, it takes a lot of time, energy and manpower to bring users to an app and actually get them to convert.

With that in mind it is crucial to understand how much you’ve spent on each customer. This can be done with a great metric called CPA, which calculates the average price you paid to acquire a customer.

Here’s how it’s calculated:

CPA = (Total cost of acquisition) / (Total no. of customers gained)

Note that the total cost of the acquisition means everything that you did to publicize it – from offline promotions to Search Engine Marketing, and social media PPC to YouTube videos.

Another important factor to note is that your app has a positive financial value only if its LV is greater than the CPA.

4. Monthly Active Users (MAU):

While the previous three metrics are great when you need to measure financial success, this one tracks a more intangible – but equally important – facet: The activity and engagement on your app. You could have over one million downloads, and still not be successful in the market if over half of those users just downloaded your app and never did anything with it.

That’s where MAU comes in: It tells you how many customers are actually using your app, and when taken in conjunction with RR, can be a powerful indicator of your app’s staying power.

There are no calculations for MAU; it is simply the number of users who actively interacted with your app in a given month, or a specific thirty-day time period.

5. Return on Investment (RoI):

Every for-profit undertaking, whether a bank, IT firm, sports league, or app, is looking to turn a profit. Bearing that in mind, the single most important metric with which to judge the financial success or failure of an app is RoI. In lay terms, RoI tells you how much you have made from your app, as against how much you have spent on making and marketing it.

RoI comes in many forms. You can either calculate RoI for the entire app lifecycle – this is something that helps business owners decide on big-picture budgets – or you can calculate RoI for a six-month or one year period. With the tracking tools available today, you can even measure RoI for a specific marketing campaign.

RoI = [(Net revenue from investment – cost of investment)] / cost of investment

As is obvious from the formula, the net revenue from your investment (your marketing campaign, app, maintenance cost, etc.) needs to be higher than what the investment cost for you to have a positive RoI.

With the rapid increase in various kinds of technology, apps have come a long way. Every day, new businesses build increasingly creative apps to capture users’ imagination and disrupt various industries. There is a dire need for increased performance measurement, to ensure that the time, effort and resources expended on creating these apps are not futile.

Looking to build an app that has the capacity to transform your business, or need creative ways to measure app performance?


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