Key Mobile App Metrics & KPIs You Must Know to Make Your App Successful
Entering the world of mobile app development is a significant achievement, but the true measure of success lies in continuous performance evaluation.
Can you assess the performance of your mobile app? Do you know how to maximise its potential? What is the cost per average user, and how many users contribute to profitability? How much can you pay to gain a new user in order to remain profitable?
These critical questions highlight the importance of tracking some mobile app metrics and defining Key Performance Indicators (KPIs), providing insights that reveal your app’s strengths and areas for improvement.
If this sounds overwhelming to you, don’t worry! In this article, I’ll discuss key KPIs that enable both marketers and mobile app developers to improve app performance and increase user engagement.
Introduction to Mobile App KPIs
Even if you’re in the early stages of building simply a Minimum Viable Product (MVP), understanding and utilising metrics is crucial for swift insights and cost optimization. The more your project grows, the more important it becomes to be aware of what’s going on and how you can improve in various areas.
Analytics plays a pivotal role in the successful evolution of your app. While these metrics are typically measured after deployment, it’s prudent to consider them even before launching your app or commencing marketing campaigns.
It’s worth noting that many critical decisions made during the development phase depend on the anticipated business performance of the app. Thus, integrating Key Performance Indicators (KPIs) into your mobile app strategy early on ensures a proactive and informed approach to development, setting the stage for long-term success.
The Distinction Between Mobile App Metrics and KPIs
I’ve noticed many times that the terms “metrics” and “KPIs” are used as synonyms, but it’s not the right approach. Although both of them are usually numbers, their main ideas and goals are different.
Mobile App Performance Metrics
The main difference is that metrics are just numbers that are observed or effects of calculations. Simply speaking, metrics tell us what is going on in a measurable way. We can calculate how many app users made a purchase and what was the average value of them. We can also define how much time an app needs to load and how much time users spend in the app with each visit.
However, those are just numbers. It’s like I would tell you that the number of passengers on the Warsaw railway in 2022 equalled 160 818 910. Impressive? I don’t know. A number? For sure.
Key Performance Indicators (KPIs)
What if I told you that the number of passengers on the railway equals 2040 fully-packed Maracana Stadiums (Brasil)? Is that much? Definitely yes. And if you knew that the New York railway has 5,6 million passengers every day? 160 million a year looks shabby in this context, right?
What if I told you that in 2021, Warsaw Railway noted 113 863 453 passengers, so the year-to-year growth was 41%? How do you feel about that? Would you like to notice such an increase in your subscribers‘ amount or in-app purchases?
This is what KPIs are for – to put the metrics in context and verify whether we’re going in the right direction. If the railway growth was assumed to be smaller or even equal to 41%, then the city could be content with what it reached. If they expected to have more passengers, they might be disappointed.
The KPI term stands for “Key Performance Indicator”, which means it’s a measure put in context. It’s not the value we observe but the point we want to reach. It’s an “indicator” of the direction we are heading towards and aims at values we want to reach through all our activities.
Therefore, these are KPIs that tell us whether we did a good job or not. As you will see in a second, we might want to reach both higher or lower values on particular metrics, but KPIs always define them clearly.
The key difference
To make it as clear as a sun – while metrics are numbers we observe in real life (e.g. in tools like Google Analytics, Google Firebase, VWO or many others), KPIs are defined by us and aimed to be reached in a particular time.
In short, metrics tell us whether we managed to reach our KPIs.
How to define them? Is the aim of reaching 100 subscribers enough? Let’s take a look at this aspect.
How to define the right KPIs for Mobile Apps
Before diving into the measurement and analysis of your application data, it’s crucial to define the main goals of your endeavours first. What’s important to you? What metrics should you track? Which measures do you want to upgrade or downgrade?
It’s a common oversight among app creators to view metrics merely as numbers, overlooking the essence of drawing meaningful conclusions and achieving expected results. I want to highlight the importance of not just measuring data for the sake of it but understanding the why behind your metrics and strategically choosing those that align with your objectives. All that depends on your goals.
Different KPIs for different stakeholders
While goals such as reducing customer churn and expanding into new markets correlate with increased revenue, achieving them requires very different strategies. Your initiatives can also include additional business elements, such as rebranding or strengthening customer support.
Determining what really matters to your business and particular stakeholders will be helpful to understand the essence of Key Performance Indicators (KPIs). This approach ensures that measurement efforts are not merely data collection but intentional steps toward achieving overarching goals.
However, different stakeholders can have different goals. The main one is always the ROI that a company wants to reach, and it’s always the point of interest for a CFO. A marketing manager will be vividly interested in ROMI to make sure the marketing efforts are reasonable and beneficial.
However, the Google Ads manager might need to stay within an assumed conversion cost, a developer might need to optimise an app to reach a particular loading time, and the UX designer will be delighted if the session depth increases after the last changes they implemented. Each person needs to focus on a particular aspect to improve on their specific area for overall app success.
Towards SMARTER KPIs
Your KPIs should be SMARTER. In the era of AI, everything is intelligent or smart – mobile phones, dishwashers, light bulbs… Even a carpet will be smart soon. But how can you make your KPIs SMARTER?
This word indicates the key elements of a good KPI. Let’s take a look.
Specific (S): define your goals clearly and precisely, leaving no room for ambiguity.
Measurable (M): Quantify your goals for effective progress tracking and assessment.
Achievable (A): Strike a balance between ambition and feasibility to ensure realistic goal attainment. Too ambitious goals that are unreachable might affect motivation, and too easy to reach might prevent you from reaching your full potential.
Relevant (R): Align goals with broader business objectives to contribute meaningfully to the overall mission. Focus on what matters the most for particular stakeholders.
Time-bound (T): Set clear deadlines to instil a sense of urgency and maintain a focused, disciplined approach.
Evaluate (E): Regularly assess progress to make informed decisions and adjustments. React when you see that reaching those goals is in danger.
Reevaluate (R): Recognise the dynamic nature of business; be adaptable and periodically reassess your goals for alignment with changing circumstances.
An example of a SMARTER KPI could look like this: “By the end of 2024, I will increase the Conversion Rate (CR) from the contact form by 7% through optimising the landing page.”
This SMARTER-defined goal ensures specificity in targeting a particular metric (CR), measurability with a defined percentage increase, achievability within the specified timeframe, relevance to business growth, and a built-in mechanism for evaluation and reevaluation.
Implementing the SMARTER technique plays a key role in setting precise goals for application metrics. By aligning your aspirations with these principles, you lay the groundwork for a strategic approach and provide measurability in improving your application. This thoughtful alignment enables your team to pursue goals, methodically supporting a measurable and results-oriented strategy.
Types of Mobile App Metrics
There are a lot of metrics that can be taken as a basis for KPIs. It would be easier to understand them by ordering them around a few categories:
- Performance and UX – how the app performs and whether the UX is appropriate
- Acquisition – whether the app attracts users
- Engagement – whether users use the app and go back to it
- Revenue metrics – focused on gaining money and being profitable
We could divide those metrics even more. We could distinguish vanity metrics that are not necessarily useful as indicators but are indispensable when it comes to measuring other things (I mentioned them hand in hand with the measures they support).
We could also tell a bit more about measures important for marketing, and this group could take some measures from other groups and be enriched by such values as sentiment, social media shares, the source of traffic, reviews, etc. However, those metrics are more company-wise and connected with the brand more than the app itself.
Now, let’s take a look at some metrics from the four abovementioned groups.
UX & Mobile App Performance Metrics
App Load Time & Latency
In the fast-paced world of mobile apps, app load speed directly influences the user experience (UX). Now, we all know mobile users aren’t exactly fans of waiting. According to Think with Google, even a one-second delay can impact conversion rates by up to 20%!
Users might be patient during the initial download, but if the app takes a lot of their time to become ready for interaction, they will probably abandon or uninstall it. That’s why load times are essential for retaining mobile app users! If users install your app but do not use it afterwards, check the app load time. Optimisation and observations on how it affects other metrics are invaluable.
App latency is the time needed to serve responses, which means to make a request when a user takes some kind of action and then gets a response from an API. It might not be as easy to track as the loading time but can affect the usability in a similar way.
App crashes occur occasionally due to inherent differences in operating systems on different devices. They abrupt the app usage because when the mobile app crashes, the user needs to start once again. If they were just in the middle of doing something, they would need to start from scratch. Annoying, isn’t it?
Product complexity, unexpected user actions, and differences in operating systems across device manufacturers can contribute to such incidents. That’s why having crash reports will be an invaluable tool in this scenario. They meticulously document the moment a failure occurs, providing insight into the causative factors and specific components involved that may result in losing users, decreasing in-app purchases etc.
This metric allows you to verify how reliable your app is. If you observe it over time, you may notice how it affects the usage of the app. No one likes it when the app crashes suddenly, so this might be the reason why you lose users. Monitor this and try to decrease the number of crashes as much as possible.
That’s a perfect measure for KPI for your software developer.
Bugs (or errors) are an inevitable aspect of application functionality, and unlike crashes, they don’t necessarily stop an application but can impact its performance and user experience.
Understanding error rates is crucial for application developers because it provides insight into the frequency and nature of problems encountered.
Like crash reports, error rates contribute significantly to optimising application development and maintenance processes. Integrating this data-driven approach helps developers proactively address potential issues, resulting in a more improved and reliable mobile app.
From a non-development perspective, this can be another indicator worth checking if you notice that the percentage of people who abandon your app has increased significantly.
Goals completion/Session depth
From the UX perspective, goals can be understood exactly as conversions are – as a set of activities users are expected to perform. That gives you an opportunity to track whether users fulfil them or not. Usually, a conversion is an activity like making a purchase that can bring money or is a mean leading to that (and it will be described as such later when I discuss revenue metrics), but you can also use them to learn more about your users, app features and the app itself.
You can define conversions whatever you like just to make sure the definition suits your needs. For example, you might be wondering how to improve your user experience to make it more convenient and transparent to your users. Obviously, you can perform user testing using external platforms for user research or watch session recordings in tools like Smartlook or Hotjar. However, none of those will be measurable and reliable at the same time (even user research on such platforms, you can read more on that in our teammate article about The importance of User Experience: UX Design Tips from Our Head of Design).
User stories put into steps and funnels
What you can do is define events in your app and put them into a funnel. Those who reach the last step fulfil the goal, no matter whether that is signing in, making a purchase or finding the right information about tickets they bought via the app.
My hint? Base on user stories to create funnels to measure the app’s performance. This way you’ll be able to verify where people give up (the drop-offs), how much time they need to fulfil their goals (so you can find a way to improve on that) and what obstacles they face during the process.
Having those, you can kill two birds with one stone. First, you have a measure that can help you define whether you improve your app’s UX or make it worse. The second benefit is that you can use the same events to filter the sessions out and conduct your own research on your users, looking for ways to improve the experience.
Session depth delves into how closely users get to a targeted action, such as making a purchase. It’s a measure of how deeply users engage with the app’s features.
On this occasion, I want to mention that it doesn’t really matter how many screens the user sees (Average Screens Per Visit). This can be tricky because a user who is uncertain what to do or what to click might go through more screens than a person who was guided perfectly by the app, reached the goal and left the app while being completely satisfied with app performance.
Installations & App Downloads
I’m certain that everyone who has ever released an app to any app store is anxiously monitoring the number of app downloads. Unfortunately, that statistic doesn’t say much. According to Statista, roughly 25% of all mobile applications are opened just once and then forgotten. That’s a significant number.
This metric should be used as a supportive one that allows one to estimate other factors. We cannot ignore it fully because it’s crucial to understand how attractive your app is for the users and whether you did a good job in stores. However, I would not recommend putting your business decisions on it.
Number of Registered Users
The number of registered users can be tricky if considered alone, with no connections to other metrics. This might be a part of a funnel to define where you lose customers. If they installed an app and registered, maybe your app is convincing so far. But if they left immediately after that and never returned, the design or content might not be of the best quality or might not align with users’ preferences (reasons might be way more than those two).
I would recommend using this vanity metric as a part of a broader analysis. It can give insights into when you lose users and, indirectly, why.
User Growth Rate
If you want to see how fast your app is gaining new users and verify whether there are some trends for that (e.g. when you launch a paid campaign, the number of users increases), measuring the user growth rate in some defined periods of time might be beneficial.
To gain the final growth rate you need to decrease the number of present users by the number of past users, divide the result by past users and multiply by 100 to gain percentage.
Let’s take a look at an example. If you currently have 90 users and used to have 100 users a month, your calculation will look like this: ((90-100)/100)*100.
As you probably noticed, the number can be both negative and positive which indicates the direction of the trend (gain or loss).
This metric might be important to track the dynamics of growth and be aware if it’s disrupted.
We’ve mentioned the registrations before, but in most cases, it’s not the last step. Sometimes you might want users to do more like purchase a paid subscription. These metrics alone won’t tell you much but are invaluable when it comes to estimating some financial metrics.
However, you can monitor the trend and look for reasons if you notice a sudden drop.
User Engagement & Loyalty metrics
Engagement KPI metrics, crucial for assessing user involvement and retention, provide a nuanced understanding of how frequently and consistently users engage with the platform.
Average Session Length
Session length refers to the time users spend actively engaging with your app on average. A lengthier session often signals higher user engagement and sustained interest, but not always. Sometimes longer sessions mean trouble for your business.
Depending on your industry and company goals, you might need people to spend more or less time in the app. For example, if you offer a social media platform, you want to attract them as much as possible. However, if you offer a mobile wallet only, you might prefer people to not spend too much time in the app itself (e.g., if this is an app for complaint management or support where you might want them to solve their problems immediately or a taxi booking app like Uber when you want to book a ride in no time).
To estimate the Average Session Length simply divide the duration of all sessions in your app measured in seconds by the total number of sessions within a defined period.
Active users are individuals who frequently open and interact with your app, engaging in various actions within its interface. Therefore, you can verify how engaging and useful the app is.
Depending on your monetisation model, the number of active users might define whether your app is profitable or not. If you offer it for free and earn money on advertising, a sudden but persistent drop in active users might affect the earnings.
There are three types of active users:
Daily Active Users (DAU)
Daily Active Users (DAU) signify the number of unique users engaging with a mobile app within a single day, providing you with an immediate snapshot of the app’s daily usage. This metric might be extremely useful for social media apps but not necessarily for medical, e-commerce or delivery ones when the need for daily interactions is smaller.
Weekly Active Users (WAU)
Weekly Active Users (WAU) extend the timeframe to a week, measuring the number of distinct users interacting with the mobile app over a seven-day period. WAU provides a broader perspective on user engagement, capturing trends and patterns over a more extended timeframe.
Monthly Active Users (MAU)
Monthly Active Users (MAU) further expand the analysis to a month, encompassing the total number of unique users engaging with the mobile app over a 30-day period. MAU offers a comprehensive overview of the app’s user base, facilitating a deeper understanding of user retention and long-term engagement trends.
The Stickiness Ratio, obtained by dividing Daily Active Users by Monthly Active Users, is particularly important when measuring the user engagement frequency within a mobile app. This metric is especially important for entertainment, media and social apps like Netflix, Disney+ or Spotify.
This ratio shows how often, on average, users return to your app within a month, serving as a crucial measure of user loyalty and sustained interest. A higher stickiness ratio indicates a more engaged and retained user base, while a lower ratio may prompt you to consider strategies to increase user involvement and retention within the mobile app ecosystem.
Let’s take a look at an example. If you have an app with 1000 Monthly Active Users and 200 Daily Active Users, then your Stickiness Ratio would be 20%. According to Andrew Chen, a 20% stickiness ratio is considered good, and if you manage to exceed 50%, you’re doing great.
An app’s churn rate refers to the number of users that abandon it after initial use, and the goal is to keep the churn rate as low as possible. Understanding and mitigating churn is crucial for maintaining a healthy user base and sustaining revenue streams.
Suppose users abandon or uninstall your app in high numbers; it could be due to reasons such as your app crashing or lagging, infrequent updates or lack of new content, absence of additional levels or achievements (especially in gaming or gamified apps), challenging navigation, or a lack of a compelling moment where users recognise the app’s value.
You can calculate the churn rate using a simple formula: divide the number of users who stopped using the app during a specific period by the total number of users at the beginning of that period and multiply by 100 to have a percentage.
By monitoring and acting upon the churn rate, you can proactively implement measures to enhance user satisfaction, address specific issues, and improve overall retention, ensuring that users continue to find value in your app.
User Retention Rate
User Retention Rate is a pivotal metric that measures the ability of your mobile app to retain users over a specific period.
It is a reflection of the app’s capacity to sustain user interest and engagement over time. A high user retention rate indicates that your app successfully keeps users coming back and fosters long-term relationships.
To measure the user retention rate, start with the number of customers at the end of the time period (E.g., March 31 for a quarterly analysis). Then, subtract the number of acquired customers during the time period (N), divide the result by number of customers at the beginning of the period (S, Jan 1st) and multiply by 100.
((E – N) / S)) X 100
This calculation results in an overall retention rate. For example, let’s say that you had 120 users on Jan 1st (S) and 160 on March 31st (E). You also gained 70 new users within this timeframe (N). Your retention rate will look like this: ((160-70)/120)x100 = 75%
Having a 75% retention rate would be a perfect result! It is said that a 42% retention rate for a 30-day period is a good result, but it decreases with time down to 25% after a 90-day period.
It’s a perfect measure to assess how valuable your app is for your users (the more it is, the longer they will use it), define your engagement strategies (to keep them engaged before they leave the app for good) and approach the monetisation strategy.
Monitoring this metric, you will know what the average lifetime value of a user is (in other words, how long they will pay or how much money they will generate before they abandon the app), and you’ll be able to extend it (at least a bit) by offering discounts or longer-period subscription in the right time. You will also be able to prepare your company for potential stagnation if you notice that you lack new registrations and know that some of your users will likely be gone in a few months.
User Satisfaction (Net Performer Score – NPS)
User satisfaction is a metric that reflects the overall sentiment and satisfaction of app users with their experience. Specifically, the Net Promoter Score is based on a simple question: “How likely are you to recommend this app to a friend or colleague?”.
By asking users this single question, responses can be categorised into Promoters, Passives, and Detractors. Calculating NPS involves subtracting the percentage of Detractors from Promoters (NPS=%Promoters−%Detractors). Then, the resulting NPS can range from -100 to +100.
A positive NPS indicates a high likelihood that users will recommend the app, which means a base of satisfied and potentially loyal users. On the contrary, a negative NPS may indicate areas for improvement and a greater likelihood of users churning. Understanding user satisfaction through NPS is like looking into the user’s perspective, providing valuable information beyond technical metrics.
What I suggest you analyse is the exit rate. It’s the number of all visits to a screen divided by the number of exits from this particular screen. That will show you how often people abandon your app on each screen and show where there’s room for improvements to prevent that.
You might have been losing users for various reasons – your content might not be valuable enough, the path to other screens might be unclear or users have just gained all the information they were looking for (e.g. when they simply want to check the reservation details). Whatever the reason is, you must verify whether that is an expected activity (like finding some information) or an undesired drop-off and cope with that by improving UX, UI or copy.
Conversion Rate measures the percentage of users who take a desired action, such as making a purchase. It serves as a key performance indicator in refining strategies and enhancing the overall user experience.
To measure the Conversion Rate, divide the number of users who completed the desired action by the total number of users and multiply by 100 to express it as a percentage.
This metric is essential for assessing the effectiveness of marketing campaigns and optimising the user journey to drive more conversions. By tracking and analysing the Conversion Rate, app developers or marketers gain valuable insights into the success of their efforts in prompting user actions that contribute to revenue growth.
Although finance-related metrics (like purchases) are the most associated with conversions, every kind of activity might be considered a conversion – from visiting a particular screen and touching a particular button to subscribing to the newsletter.
Each of those activities might have its own conversion value. It’s easy to define it when it comes to a single purchase, but it’s also possible for other metrics if you have some additional data. Let’s consider an example of subscribing to the newsletter.
You might know that 5% of all users buy a subscription, but those who give their marketing consent for newsletters are 10% more likely to do that (their probability is 15%). You might know that, on average, users subscribe for ten months, paying $10 a month (which gives you $100 per user). Therefore, you can estimate the average value of such a simple activity as providing marketing consent.
Cost Per Acquisition (CPA)
Similarly, you can measure the cost of the acquisition of a conversion. This metric doesn’t necessarily refer to new customers but measures how much you must pay so a user fulfils a particular activity at the end of your funnel (newsletter signup, purchase, upgrade, sharing their promo code or any other conversion you define).
To measure such a cost, you simply need to divide the amount of money spent on a marketing campaign by the number of conversions it generated. For example, if you spent $400 on a campaign and generated 80 registrations (which were your conversion), your CPA is $5.
Cost Per Install (CPI)
If your advertising is aimed at driving app installations, your Cost Per Acquisition (CPA) will be equal to the Cost Per Install (CPI).
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) indicates how much money you need to spend for all activities (advertisement, labour cost of your departments, cost of assets that were purchased to run a campaign, etc.) to gain one app user.
To calculate these metrics you need to have all the costs defined in a particular period of time. That means you need to know not only how much you spent on advertising, but how much time your teammates spent on making it alive and how much you paid for all additional resources (e.g. design services if you don’t have a graphic in your team or software that you used).
Then, divide the cost by the number of new customers you acquired in the exact same period of time.
Let’s take a look at an example. Let’s say that in a quarter you’ve gained 20 new customers spending $3000 for advertising, $6000 for salaries, $2000 for graphics assets and $1000 for software. That gives you $12.000 to gain 20 customers so your CAC will be $1000. Is that much? Well, that depends on the type of software you offer and the expected customer lifetime value. To make it profitable, you should have a high-value product or make your customers loyal for a long time.
Average Order Value (AOV)
Average Order Value (AOV) is especially important in shopping mobile apps because it helps calculate a single order’s average value. These metrics might also be useful in apps that sell some items, e.g. digital assets for games, exclusive coins or any other stuff with a financial value.
To measure that, divide the value of all orders in a particular period of time by the number of orders.
By measuring the mobile and web AOV, you can estimate which source performs better and use the full potential of mobile marketing (hand in hand with personalisation and AI, e.g. via tailored recommendations) to increase the value.
By increasing the AOV, you have the potential to decrease the customer acquisition cost and increase the profitability and revenue. However, it won’t happen if your product or customer service is not satisfactory and people make only one purchase in their customer lifetime (even the higher tier of subscription). That might result in high acquisition costs and low customer lifetime value, which might challenge your business in the long run.
Time to First Purchase
An important measure is the Time to First Purchase, which allows you to predict the timeline in which a registered user can bring you some money (e-commerce purchase, in-app purchase, paid subscription or any other type of paid activities). Let’s take a look at an example.
Assuming that you own an app that allows people to use it for free with some basic features and no time restrictions, the average Time to First Purchase is the time that passes from installing the app to purchasing any of the paid subscriptions, e.g. two weeks.
You need to be aware of the time first to purchase and the average time people stay active members to estimate how much revenue you’ll be able to generate in upcoming periods of time. It will also help you to understand the customer journey and perform some activities to engage users exactly when needed to keep them engaged and help them use your app the way it’s intended to. That will help you to guide them from free to paid membership.
Lifetime Value (LTV) & Customer Lifetime Value (CLV)
Lifetime Value (LTV) is a metric that calculates the total revenue that an average customer is expected to bring to the business throughout their entire relationship with the app. This metric aids in strategic decision-making, enabling personalised marketing efforts and fostering long-term customer loyalty.
To calculate the Lifetime Value, you need to know, on average:
- How long does a user use your app (how many years a user is active)
- How many conversions does a user make each year?
- What is the average value of a single conversion?
Then, multiply the average number of years a single user uses your app, the average number of conversions within one year and the average value of a single conversion and you’ll get the LTV.
There is a slight difference between Lifetime Value (LTV) and Customer Lifetime Value (CLV). While LTV allows you to estimate a global value for an average user, Customer Lifetime Value is calculated for each user separately and can be used for segmentation and leverage customised campaigns (you can read more about those measurements on Gartner.
Keep the Customer Lifetime Value high and Customer Acquisition Costs low to grow your business dynamically.
Average Revenue Per User (ARPU) & Average Revenue Per Paying User (ARPPU)
ARPU stands for Average Revenue Per User and is calculated by dividing the total revenue generated by the app over a specific period by the number of active users during that same timeframe. This straightforward calculation offers a clear understanding of the app’s revenue-generating potential.
Average Revenue Per Paying User (ARPPU) is calculated similarly, but it refers not to all active users but to those who bring money to your business (by in-app purchase, subscriptions and other ways of monetisation).
The main difference between ARPU and Lifetime Value (LTV) is that ARPU indicates the revenue an average active user generates each month or year, while LTV allows you to estimate the amount that an average user is expected to generate throughout their relationship with your app. Therefore, while ARPU allows you to monitor the efficiency on an ongoing basis, LTV is a must for data-driven decision-making.
App developers and marketers can tailor monetization strategies more effectively by knowing the average value attributed to each user. This enables the maximisation of user value and ensures that revenue-generating efforts are targeted and optimised for sustainable financial growth.
Return On Investment (ROI)
One crucial metric for evaluating profitability and effectiveness is Return on Investment (ROI). This metric functions as a profitability measure, providing insights into how well an investment in a mobile app has performed. Essentially, ROI ensures that resources are allocated strategically to initiatives that yield the highest returns and contribute to overall financial success.
To measure ROI, you can use the following formula: subtract the initial cost of the investment from its final value, then divide this new number by the cost of the investment, and multiply that number by 100. For more details on how to calculate that in detail and more examples, you can check Investopedia.
ROI is the most important measure that indicates the direction that a company is heading towards. Positive ROI is the indicator of growth and development, while negative should be a concern.
Additionally, you can measure Return on Marketing Investment (ROMI). However, for more information, I refer you to Investopedia.
Summary – how do you choose the right metrics and define KPIs?
As you see, there are many metrics; however, not all of them are interesting and useful for every stakeholder. Observe the most important from your standpoint and use those metrics to monitor the direction your company is heading towards. Express your business goals in the form of SMARTER KPIs and measure whether you’re on track using the variables I discussed above.
However, numbers usually tell stories. They are not only quantitative measurements. There’s always “why” behind every single number; your role is to look for those explanations.
Why is your ROI increasing? What have you done? How can you improve? Why is your churn rate growing? What can you do to prevent that? Why did in-app purchases decrease despite your efforts? Why don’t people use features you’ve built for months? You’ve built them as a response to their feedback!
You won’t find answers to those why questions in a single numeric variable. Combine them to define potential issues and seek qualitative explanations and ways for improvements.
After all, numbers are just the beginning of the story.
Good luck, and let me know on LinkedIn what KPIs you managed to reach!
Marketing is about research and communication. As a social scientist and marketer with many years of experience, Kasia combines knowledge and crafting to help design the app and plan and execute marketing strategies for TeaCode and our clients.
Even the best app can fail if no one uses it. How do we reach them with our messages in a world saturated with communication? That's why she helps clients spread the news about their apps worldwide.