Retention Marketing: The Secret to Building a Bullet-Proof Mobile Business

Posted on April 21, 2020

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Retention Marketing: The Secret to Building a Bullet-Proof Mobile Business

COVID-19 has had a major impact on mobile businesses. Many industries are facing significant drops in user activity — with some seeing 80% fewer app launches. To keep their brands afloat, marketers are looking for new ways to keep users engaged and customers coming back. 

Customer retention has always been essential to a sustainable business. But in stressful times like these, brands must have effective retention marketing strategies to help them hold on to every customer they have. 

Why? Retention marketing increases business profitability in three big ways:

  • Average Order Value: While repeat purchases make up only 8% of customers, they contribute up to 40% of all sales.*
  • Customer Lifetime Value (CLTV): By improving the frequency and amount that each user spends with your app, the profitability of each user goes up.
  • New Acquisition Opportunities: With higher LTVs per user, you can now afford to spend more on new customer acquisition channels and grow your app exponentially. 

In fact, brands that adopt a retention-first marketing strategy see an average 40% increase in lifetime value and a 20% increase in repeat purchases.*

We’ll break down this meaty topic into a plain-English primer on retention marketing, including a simple retention marketing definition, steps to build your customer retention plan, and retention marketing examples from some of today’s most-loved apps.  

What is Retention Marketing?

Customer retention marketing involves creating campaigns that focus on your existing user base in order to create habitual users and repeat customers. The goal is to improve app engagement (session length and frequency) as well as business revenue (purchase frequency and average order value).

The most common way to measure retention marketing success is your app’s retention rate. We recommend tracking retention at three stages: 

  • Onboarding (days 0-2): If your first-time user experience helps new users experience your app’s value, you’ll see an above-average retention rate during this period. 
  • Building user habits (days 3-10): If your app is becoming a regular part of new users’ lives, you’ll see churn start to stabilize. 
  • Long-term retention (days 30, 60, 90): You want to see users sticking around week after week, month after month.

Use our retention rate calculator to quickly and accurately measure your customer churn. 

How to Build Your Retention Marketing Strategy

If you’ve built a business on the foundation of user acquisition, odds are you’re beginning to understand the importance of a retention-first growth strategy. Without solving the customer retention problem, businesses get stuck in an endless cycle of costly acquisition campaigns — all in an attempt to replace the customers they’re losing in a matter of days. And the only thing it leads to is faltering ROI and businesses that are vulnerable to uncertainty. 

But by shifting your focus from acquisition to retention, you’ll see just how big of an impact retention marketing strategies can make on your business’ bottom line. 

Even small improvements have a significant effect: a 5% increase in retention correlates with at least a 25% increase in profit,* and a 7% jump can boost CLTV by as much as 85%.* 

Not to mention highly-engaged customers buy 90% more often and spend 60% more per transaction.* 

Bottom line: retention is the foundation of a recession-proof business. Here’s how to build your retention marketing strategy from the ground up. 

Step 1: Understand Your User Journey 

Understanding how, where, and when potential and current users interact with your brand is essential to optimizing retention at every stage. A user journey map is an important reminder that different users discover your brand in different ways, and may have different expectations for your app.

By understanding what those expectations are, you can better tailor your user experience to meet your users’ needs — and boost retention rates for every key user segment.

Step 2: Determine Current Retention and Churn 

How many customers are leaving? When are they leaving? Who are your most satisfied customers, and why are they so happy with your app? 

Use cohort analysis to find out how many customers churn, when they churn, and  what the contributing factors are. 

Cohorts may sound complicated and data science-y, but they’re really not. A cohort is simply a group of users who share a common trait — it could be they all downloaded your app on the same day, or they all purchased a certain product, or they all use a key feature. 

By tracking cohorts over time, you can see how different factors impact retention. 

Do users who joined via a certain acquisition source stay more active on your app? Do users who receive a particular messaging campaign convert more frequently or spend more? 

By seeing what’s working (and what’s not), you can find out what your most valuable users are doing, and what leads other users to uninstall your app. And you can test any new messaging you may be trying out to measure its impact on your conversation and retention rates. 

Step 3: Focus on Onboarding and First Purchase

All retention phases are important… but they’re not all equal. At the end of the day, the initial retention phase is the most critical. 

If users don’t have a good first-time user experience, the chances of them coming back are slim. One in four mobile apps are abandoned after the first launch.*

The good news? Onboarding is often where you can be most effective in preventing churn. 

There are a few golden rules for effective onboarding: keep it simple and give incentives to encourage a first conversion. Use UI overlays, simple walkthroughs, and visual hints to help new users quickly experience the key benefit of the app. 

However you structure your onboarding process, make sure it’s effective in delivering value to new users early and often. 

Step 4: Use Funnel Analysis to Solve Friction Points 

A smooth user experience is essential to keep users coming back. But sometimes it’s difficult to know where your app’s sticking points are. 

Funnel analysis will shine a spotlight on them. 

Conversion funnels help you focus on key spots in your app: the registration or checkout process, for example, to show you how many users start the process vs. how many finish it and exactly where they drop off. You can zero in on trouble spots and get more users to complete the most important in-app actions. 

By optimizing your funnels you can not only boost conversions, but improve and simplify the user experience. Think Amazon’s one-click ordering. They’ve shaved the purchase process down to a single step, removing as many barriers as possible to make it quick and easy for customers to get what they want. 

Step 5: Use Data to Create Personalized Customer Communications

Retention marketing is all about connecting with users on a personal level. It’s about improving the entire end-to-end user experience in a way that deepens their relationship with — and loyalty to — your brand. 

Human-to-human connections are essential to connect with customers and keep their attention — now more than ever. But in order to create empathetic messaging and effective offers, you’ll need meaningful insights into who your users are and what they care about.

Luckily, there are mobile marketing platforms that create detailed user profiles beyond simple demographics to technographics, psychographics, user intent, and more. Collecting and analyzing this user data helps you understand your customers based on a complete picture: from their age, gender, location, and interests to how they use your app. 

All of these insights help you engage customers over the long term. And it’s a virtuous cycle: the longer you keep users, the more you get to know about them — and the better you can meet their needs. 

Step 6: Make it Easy for Users to Share Feedback 

Retention marketing is all about your relationship with your users. And everyone knows communication is the key to a healthy relationship. 

Requesting user feedback is the best way to identify and fix friction points before users ditch your app — or take to App Store reviews to air their grievances. Users want to know that you’re listening to their comments, suggestions, requests, and complaints and doing something about them. 

Ask for feedback (and include contact information) in your release notes, emails, and blog posts, and feature an in-app survey or feedback button in your app. 

Retention Marketing Examples: Real-Life Retention Marketing Campaigns from Successful Apps

How have today’s top apps used marketing tactics to retain users and outlast the competition? Here are a few of the very best retention marketing campaigns to inspire your own efforts. 

Onboarding Campaign

MyFitnessPal helps users track calories and log workouts via a simple user interface and comprehensive food database. 

The app’s onboarding process is specifically designed to encourage new users to log something they’ve eaten. This allows them to immediately experience how easy it is to count calories with the app, with no guesswork or approximations. 

Subscription Campaign

While there are many ways to monetize your app, the subscription model is not only an effective way to generate revenue, it can also improve retention. By providing incentive for users to purchase a month or even a year-long subscription, you can build user habits and loyalty. 

The New York Times app is a free download, and it’s currently offering any articles on the COVID-19 pandemic to all readers without a subscription. But it also encourages free users to purchase a subscription in a variety of ways. 

For one, the first thing a new user sees upon first launching the app is a full-screen message reinforcing the news outlet’s authority and prestige in journalism. 

They also show an in-app message to non-subscribers counting down remaining free articles for that month. These marketing messages all entice free users to purchase a subscription and commit to the app as their trusted source for breaking news. 

Referral Campaign 

By incentivizing current users to recommend your app for a reward, you can both encourage them to keep using your platform and provide prospective users with powerful social proof to encourage new downloads. 

And it works: 77% of mobile users say they downloaded an app because they heard about it through word of mouth.*

Dropbox, Airbnb, and Uber have famously used mutual incentives as viral loops to retain and reward current users, and acquire new ones. 

Content Marketing Campaign

Become your users’ go-to resource on anything and everything pertaining to your industry. By providing solutions to their problems, they’ll see your brand as the leader in your space and default to you for future purchases.  

DoubleTree Hotels, owned by Hilton, recently released a content campaign sharing the secret recipe for their famous chocolate chip cookies — a recipe bakers had been attempting to copycat for years. 

The recipe video has been viewed more than 400,000 times,* with fans posting their home-baked cookies to social media. This type of content helps DoubleTree maintain a strong connection with customers even when they’re not able to travel. 

Loyalty and Rewards Program campaign

Starbucks is a master at using the convenience of mobile to engage and retain customers. And even with the limitations of social distancing, they’re not sitting back and letting the coronavirus pandemic create a rift between them and their customers. 

Their app has always featured a simple loyalty system that rewards users with stars for each order placed, which can then be redeemed for free food and drinks. Even now, with their app home screen entirely focused on COVID-19, they feature a helpful announcement letting users know that rewards points expiration dates have been extended. 

It also notifies users that while in-store cafes are closed, drive-thrus and delivery still offer a safe and convenient way to get their favorite caffeine fix, shares how Starbucks is helping its employees stay healthy, and highlights their $1M donation to Feeding America. Plus, it offers an empathetic, human touch with spotlights on acts of kindness and a “Peace” playlist curated by baristas.

These updates all effectively reinforce their brand and help maintain their emotional connection with customers during this turbulent period.

User Community Campaign

Creating an active, passionate community of users who share a common interest can be a powerful way to keep customers engaged with your app — especially in times of crisis when people lean on their communities for support and connection.

Take REI: their lifetime membership isn’t only about member-only coupons and sales (although these help too). It’s about participating in a community of fellow outdoor enthusiasts. REI emphasizes the discussions, classes, and general camaraderie that come with a membership. 

Getting advice on things like which backpack to buy or the best hikes at your favorite national park not only keep users engaged in the REI community, it makes them more likely to take the plunge on that $150 backpack.

Reactivation Campaign

Just because a user uninstalls your app doesn’t mean they’re gone forever. Don’t forget to create retention marketing campaigns targeting inactive or uninstalled users. 

Take it from Instacart — they created an email campaign incentivizing inactive users to come back with free delivery and discounts, and added a sense of urgency with a time-sensitive deal. 

Use surveys and other forms of user feedback to understand why people uninstall your app, and then use that information to address that issue. Think new feature announcements, discount codes, or personalized content/product recommendations. 

Email marketing platform Return Path studied reactivation campaigns* and found two important best practices:

  • Specify dollar amounts in the subject line. $ off are almost 2x as successful as % off discounts.  
  • Act fast. Only 1.8% of emails sent to long inactive users were read, compared to the 12% average.

The Key to Successful Retention Marketing

Churn rate is like a fire alarm. It a warning sign that something’s very wrong, but it doesn’t help you put out the flames.

Successful retention marketing means going deeper than churn rates to understand who is uninstalling your app, when, and why — so you can make informed decisions that will have a deeper impact on your app’s growth. 

The first step is tracking retention rates, identifying key user segments, and building customer retention strategies.

See how CleverTap helps 8,000+ global brands build retention-first businesses that last. Get a personalized demo with one of our mobile marketing experts.

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