4 Ways to Reduce User Churn for Mobile App Startups

This is a guest post from our partners at Yodel Mobile, the leading global app marketing consultancy.

It’s a common misconception that the acquisition of users is the main indicator of mobile app success. In reality, without active users, a high install rate doesn’t bring any business value. Therefore promoting engagement, customer lifetime value and retention is key., More important than this, is understanding why your users abandon your app is crucial in achieving long-term success. 

Research shows that about 89% of average mobile app users are lost in the first 7 days after install, and nearly 95% within the first 30 days. Scary stuff! So what does that mean for your mobile app business? A high churn rate indicates your customers aren’t happy with your product and your leaky funnel could be pouring potential revenue down the drain. 

Although some level of user churn is inevitable, you’ll want to keep a sharp eye on your churn rate and deploy strategies to minimize it as much as possible. 

In this post, we share the common reasons behind mobile app churn and discuss 4 effective strategies that can help you minimize user drop-off.

But before we jump straight into it, let’s recap what user churn is all about and why it’s important.   

What is user churn?

User churn is the number of customers that have stopped using your company’s product or service over a certain time frame. Churn can also apply to the number of users who stop buying your products or don’t renew their subscriptions.

If you don’t monitor your churn rate, it can have a devastating effect on your bottom line. Losing customers will set you back financially, but you’ll also need to invest resources and time into finding new ones to cover the lost income.

The truth is that acquiring a new customer can cost you five times more than keeping an existing one, so tackling user churn is essential and will protect your investment in growing the app.

Why do users churn?

Startups need to understand where, how, and why their users are churning.

There are multiple reasons why customers go elsewhere, depending on your product and services, but here are some universal takeaways that affect a lot of businesses.

1.You’re attracting the wrong customers

Many customers sign up for a service or product without fully understanding what it offers. Once they realize your product isn’t for them, they’ll leave your app in a flash. In many respects, the wrong type of user churning isn’t a tragedy. Over time, they will either leave or fail to upgrade anyway but why would you want to acquire the wrong users in the first place?

That’s why utilizing the right User Acquisition (UA) and App Store Optimization (ASO) processes will help optimize your app, improve your visibility on Google Play and the App Store and strengthen your acquisition efforts. 

If your offer is unclear or misleading, customers will become disappointed and churn.

Both processes can help prevent customer drop-offs by improving the scale of high-intent users and ensure they are educated on your app’s value propositions ahead of install.

2. Customers experience payment failure

According to a GoCardless report, up to 4 out of 10 customers churn due to payment failures.

The annual churn rate for subscribers who use a debit card (or “ACH” in the US) is only 4%. While for users paying with a credit card, the churn rate is three times greater at 14%, and 16% for customers purchasing with a digital wallet (i.e., PayPal).

The report also reveals that 20% to 40% of subscriber churn occurs because of payment failure. Subscription-based companies can lose between 1% and 6% of their customer base every quarter because of payment failures.

So when choosing your payment methods, it’s essential to pick one that suits your customers.

Ask yourself these key questions: 

• Is the payment journey straight forward and accessible?
• Is the customers’ data secure?
• Can customers pay in their own currency? 
• Does your payment provider offer fraud protection? 

By making it easier for your customer to pay securely, you’ll gain their trust and confidence in your business.

3. Your product or service doesn’t work effectively

Customers often sign-up for your product or services in good faith, but they’ll expect everything to work perfectly. You can expect a high churn rate if any delay, fault, or bug impacts their user experience.

8 out of 10 users will delete an app if they don’t know how to use it.

Remember, users expect intuitive and seamless experiences on mobile, so you need to help them achieve their goals as easily as possible. 

For example, Xero offers “online accounting software for your small business.”

When a customer uses their mobile app, sending an invoice represents the moment they’ve completed the onboarding process.

If Xero’s users understand the value proposition of the app from the start, there’s a high chance the churn rates will decrease.

So how can you reduce user churn?

It’s 2022, and customers hold all the cards. People have overwhelming access to apps and saying goodbye is as easy as clicking the ‘uninstall’ button. So how can you stop users from abandoning your app?

Here are a few tips:

Educate your customers about your app’s benefits 

The quicker users understand your app’s value, the better your chances of keeping them engaged. 

The key education point is your app store listings. The on-page elements of the app stores, such as your screenshots, preview video, and description, are essential in highlighting your app’s functionalities and benefits. Not sure which elements of your listing are the most compelling in driving users to download? Test them! A solid A/B testing strategy can supercharge your organic growth, help your app climb up the app store ranking and alleviate the dependency on paid user acquisition.

Another way to educate your users about your app is through the onboarding process. Make sure your onboarding screens provide a concise, visual and informative introduction to your app and give your users a glimpse into your app experience.

Segment your audience better

Segmenting your users into profitability groups, creating personalized experiences, and offering incentives, such as discounts and special offers, will help you prevent user churn. The more attention you give to specific audience segments, the faster you’ll identify their pain points and send relevant content to them to improve retention and engagement. 

Improve your app’s usability 

If your app is slow or hard to navigate, users will abandon it very quickly. That’s why it is essential to monitor your app vitals, such as crash rate, which could negatively impact the user experience and encourage churn. 

Additionally, app users have high expectations that app products evolve in line with user feedback and demand. This means introducing highly requested features for app updates, or ensuring a more personalized experience to encourage delight points for users.

To mitigate the risk of churn, introduce A/B testing into your strategy. Testing various features, app design elements or even the onboarding process will allow you to learn more about your users, understand their needs better and inform your product roadmap.

Review your analytics 

To prevent churn, you must identify why users are uninstalling your app and fix it. It’s that simple! 

Is there a page or CTA button that’s not working correctly? Or perhaps there’s an awkward pause between the screens? Diving deeper into your app’s analytics will help you identify users’ pain points and make necessary improvements to your product. 

There are a plethora of mobile app analytics tools with a variety of useful features that can help you track user activity within the app. Trust us, it’s worth the investment! 

Wrapping up user churn 

As the app market heats up in 2022, having a strategy to reduce user churn will be essential to the success of your business. Retaining customers is common sense — you save money by keeping your existing users happy.

By focusing on your app’s experience and keeping users engaged, you’ll be able to keep churn low and engagement high this year and beyond!

This is a guest post from our partners at Yodel Mobile, the leading global app marketing consultancy. Yodel Mobile has driven sustainable business success for thousands of app companies, both start-ups and scale-ups, through their award-winning growth marketing strategies.