The Holy Trinity
Key insights about user acquisition, retention and monetization from our partners.
As part of the Business Development Team at Cappsool I have spent countless hours meeting with app developers hearing their concerns and challenges. Throughout all my conversations the same issues kept coming up, what I now think of as the holy trinity of the app world.
I am speaking, of course, about user acquisition, retention and monetization. Each one an important factor on their own, with an interesting push and pull relationship… But are they all equally important? Can we have one without the other? When is the right time to focus on each one?
While it’s possible to dedicate a blog to each of these points, let’s just give a quick overview to make sure we are on the same page:
- User acquisition (UA). Growing an app’s user base is a constant goal. We all know the spectrum of channels to aid in this, each with their pro’s and con’s. From the more traditional marketing campaigns, to cross promotions, to the really out there approaches (you can get inspired here) UA takes a huge effort.
- Retention. Simply put: is your app providing any value to your users and do they keep coming back? If you’ve managed to hold on to their attention over a few days, a few weeks, or even a few months then congratulations, you are doing something right.
- Monetization. You’ve put in all that work, you’ve gotten users, but can you monetize them? The monetization world of apps is pretty straight forward. Most likely you will either (1) have a paid app, (2) provide in-app purchases, (3) offer a premium subscription, or (4) advertise. The tricky part here is finding the model that works for you and the one that won’t alienate your users.
Until now this is all rather standard. What I wanted to share with you are some of the insights and learnings I’ve heard from our partners and how they think about these issues:
- How to get good organic UA. While organic UA is always the dream, the reality is you have to spend money to make money. A good paid UA strategy will lead to organic growth. As a benchmark you’ll want no more than 25% of your growth to be from paid UA.
- All about retention. One of our partners chooses to focus only on retention (due to of lack in budget and manpower). They figured out that improving retention is easier and cheaper and has better ROI than user acquisition. A “good old loyal” user is better than a new user in all aspects especially lifetime value (LTV).
- When good retention doesn’t look good on paper — it’s not always a sign of trouble. There’s no way around it, some apps no matter how much they are loved, are ones that we use infrequently. Even though your retention may look weak on paper, you can still have quality users that you can monetize. If faced with such a scenario emphasize this in your monetization strategy: think more about building it out with subscription models or in-app purchases.
- When to think of monetization. A monetization strategy MUST be part of the initial product planning, i.e, don’t be lazy and build a business plan (even if it seems far fetched for now).
- What you need to make ads work. Some app developers think they only need to put in an ad unit and the money will roll in. However as a publisher the more you know your audience the more you can work with your ad partner to achieve the best results.
- Monetization through ads. The holy grail of advertisers is showing an ad that meets the user in the right place and time for their product. Facebook and Google are trying to use their endless data doing so but it’s still not complete.
- Ad’s don’t have to be evil. Monetization must be done with the perfect balance as to not alienate new users, or lower retention. While most app developers have the knee jerk reaction to think of ads as a necessary evil there are ways to do it correctly. In the short term you may get more revenue by added a banner and interstitials you are hurting yourself in the long run by losing users. Native ads that are well designed and relevant to users can provide a long term solution that keeps your existing users happy, will help onboard new users and will increase your revenue.
Whether you have an app, or are in the stages of developing one it’s always good to break down these aspects and make sure your strategy is relevant and right for your needs. I hope some of these insights will help you, and if you have any other insights please share them in the comments.
Written by Omer Shoham, Business Development Manager at Cappsool.