Churn: What It Is and How App Developers Can Minimize It

As a mobile app developer, how do you make sure there are more new users than those who leave?

The key metric for measuring this is the churn rate. This article will explain the nature of churn, how to calculate it, and reduce your app’s churn rate.

What is Churn?

Churn rate, or attrition, is the share of customers that your business loses (weekly, monthly, annually). It can be calculated as the number of people who have recently stopped using your app to the total number of active app users. One indicator divided by the other gives us churn as a percentage of the total base.

This metric is the opposite of Retention and can be calculated as follows:

Churn Rate = 100% - Retention.

These parameters allow you to look at the situation from different perspectives. The goal of increasing Retention helps the team focus on keeping the users engaged while reducing Churn makes them pay closer attention to fixing bugs and crashes and improving the product to prevent attrition.

Calculation example:

If Retention = 85%,

then Churn = 100% - 85% = 15%.

Ideally, your churn rate should be close to 0%, but this never happens. The best you can do is find ways to reduce it.

How Big of a Problem Is It?

A high churn rate is definitely a threat to your business. If customers are quick to discard the app, your ad costs might never pay off. 

Any long-term strategy should look to minimize churn. If your updates and recent marketing steps make it grow, don't hesitate to review your tactics, KPIs, or product strategy.

The average annual Churn Rates by industry are as follows:

  • US banks: 20–25%;
  • European mobile carriers: 20–38%;
  • American telecom companies: 0.84%;
  • SaaS: 5–7%;
  • mobile apps: 75–90%.

As you can see, there is no common rate – it depends on the industry and varies greatly between mobile app types. On average, more than 75% of users never return after the initial launch. The churn rate in the mobile industry is extremely high, and those who closely monitor and manage to reduce it gain a significant advantage.

How to Measure Churn?

Churn calculation depends on the type of business. 

If you're a subscription-based SaaS provider, measuring churn is easy – a user who has not renewed their paid subscription is gone. But it gets more complicated if you run an online store. In this case, you need to segment your customer base according to the buying frequency and spot the moment when the user is likely leaving forever. 

Luckily, measuring Churn for mobile apps is easier. There are metrics that can indicate that there may be a problem with your churn rate. 

Daily Active Users (DAU)

One useful metric for Churn analysis can be Daily Active Users (DAU), which indicates the number of customers actively using your application every day. If an update is followed by a decline in DAU, it means your latest ideas have not been taken well. DAU is a leading indicator, i.e. it can reveal a problem before you face the consequences.

DAU graph in myTracker

You can view your app’s DAU in myTracker’s Report Constructor by going to Metrics by device or Metrics by user and selecting User activity / Device activity. There you will also find the flow metrics – Weekly Active Users (WAU) and Monthly Active Users (MAU).

Lifetime Value (LTV)

Another way to indirectly gauge your Churn Rate is through Lifetime Value (LTV). This metric shows how much revenue a customer has generated over the entire period of using your app. If an audience's LTV is going down, there has likely been some attrition, in one form or another. It may be the case that paying users are leaving, while non-paying users keep coming. This needs to be monitored closely.

As we mentioned, Churn Rate and Retention are opposite to each other, with a higher Retention meaning a lower Churn Rate. Retention is a popular indicator in analytics. With myTracker, you can also track Rolling Retention and calculate both in two ways:

  • as a Lifetime metric – for the whole time the customers have been using the app (convenient for checking the current state of the business);
  • as a Current Attribution (CA) metric – by the audience acquired over a specified period as part of the current attribution (allows you to track Retention for specific events and traffic sources).

Using myTracker's Churn Metric

Declines in activity can easily be spotted using myTracker's Churn metric. It shows the number of active users who stopped using the app in a certain period. 

Once you set the reporting period, the tracking system will display the number of users who stopped using the app during this period.

To do that, it takes the total number of active users/devices in the period you set, calculates the indent between that period and the control period, and checks whether all the users from the reported period were also active in the control period. The result is shown as a percentage. By using this approach, you can gauge сhurn from one month to another.

You can learn more about how myTracker churn calculation works here.

tracking churn in report constructor

This is the fastest and most convenient way to track your Churn Rate. It can be calculated on a daily, weekly, or monthly basis. On top of that, both Churn and Retention can be gauged in myTracker as either Flow or Current Attribution metrics. The latter are calculated for events within the reporting period as part of the relevant attribution and can be set to show data on specific traffic sources. After all, it is quite possible that users coming through certain channels are the first ones to leave.

How to Reduce Churn Rate?

Our comprehensive solution contains a whole set of tools to help you figure out the problem and build the right strategy. The ways to curb Churn include:

Loyalty Programs 

Users receive bonuses for using the app and are motivated to open it regularly – daily or weekly. Those can be treasure chests in games or complimentary drinks or starters for loyal customers in restaurant apps. Customers get used to the app and are motivated to keep opening it, while you have a reason to send push notifications once in a while (to make sure the weekly bonus gets activated).

Collecting Customer Data

myTracker gives you access to a lot of important information about users of your app – their preferences, age, gender, gadgets, and so on. You can group customers with similar behavior into cohorts and tailor your offers accordingly.

Strategic Targeting 

Base your targeting decisions on data collected by the tracking system while not wasting money on attracting people who will not stay.

myTracker helps you segment users, define your target audience, and focus your marketing activities on the right customers. The easiest way to reduce churn is to target the right users from the start – those who are going to appreciate your app, use it for a long time, and recommend it to their friends.

A quick way to tell if your targeting is correct is to look at the 1-day Churn Rate, which shows how many users trickled out the day after the installation. The targeting experts and ad campaigns for which it is lower are on the right path.

Retargeting and Personalized Campaigns

The users who have left can be brought back with retargeting. A month or two after a user left, tell them that you have updated the app. Finding former users is easy with our tracking system. It supports reattributions and shows when and why an old customer came back.

It is also worth having different ads for each group. Customers can be grouped using myTracker or, for example, built-in geolocation. For instance, the KFC app narrowly targets the users in close proximity to their restaurants and sends them push notifications with offers available on that day only. The share of those who end up visiting the restaurant is 22%. The chain gets 0.34% of its total revenue (more than USD 78 m annually) from this one personalized in-app campaign.

Social Media Marketing

A mobile app integrated with social media makes it convenient to share, bookmark and discuss interesting content posted by the company. If it can be done directly from an app (for example, a fitness app allowing you to share your progress), customers will be more engaged and Churn will be lower. Another option is to offer bonuses for joining your groups, recommending the app to friends, or following your pages.

Service quality control

If users assign ratings and leave comments in the app, it can be used by marketing specialists to identify weaknesses and retain customers. The administrator can receive notifications about any new negative reviews via their account in a CRM system and send a message with an apology gift to the unsatisfied customer (which is always cheaper than acquiring a new active user).

The easiest way to check your churn rate is with myTracker. This metric can be found in our Report Constructor. It shows how much of the audience you have lost in a certain time (in weeks, months, or days). What percentage of users never logged into the app again.

tracking churn in myTracker

In myTracker, you can see what events the churn is associated with. Has it increased or decreased since your last update? Is it the main reason for failures, bugs, overly aggressive monetization, and interface flaws? myTracker allows you to more accurately deal with the problem, see it in detail and reduce the churn rate much more effectively.