Reduce churn and re-engage users

Mar 6

Reduce churn and re-engage users

Ever since the early days, when studies showed that 26% of Apps are only opened once, “churn” has hung like a shadow over the economic viability of Apps for B2C companies. But even as Apps become more sophisticated, interfaces improve and user experiences are optimised, churn remains as high as it has ever been, leading many to ponder just how to hold on to those elusive users.

This is a common scenario that StreetHawk tackles with its automated communications.

The impact of churn

Leaky Bucket

Beware the leaky bucket

1. Churn limits customer lifetime value

The majority of Apps, rather than being bought outright, are either:

  • operating on a freemium model
  • supported by advertising
  • Part of a SaaS experience
  • Enabling real-world engagement or transactions (such as retail)
  • acting as a companion App for branding or marketing purposes.

These all rely on an emphasis on long term user engagement and monetization….or customer lifetime value (LTV). The bottom line is, your average cost of acquisition per customer must be less than average LTV. Every churning user loses all their revenue potential forever into the future. That’s a big hit.

In the figure below, this represents one users journey in your App. It cost a certain amount to “acquire the user” (this is the red line). As time goes on, you try to monetise this user (represented by the green). They accumulate lifetime value up until the moment they leave. The time until this happens relates directly to the churn rate. Obviously if the user churns before red and green cross, you lost money on that user.

Analysis of Cost of Acquisition vs Lifetime Value

2. Churn puts a ceiling on growth

Your churn rate not only determines how much each customer is worth, but also puts a cap on how many customers you can have all together, at constant acquisition.
Here’s how it works:
Say you have a churn of 20% per year. Then from an overall perspective, you can expect the lifecycle of your entire customer base to be 1/20% = 5 year. That means 5 years from today, all the customers you gathered this year are gone. With this limitation in place, you can only ever gather up a total number of 5 years’ worth of customers. However, if churn is halved to 10% per year, your number of customers doubles to 10 years’ worth.

 

Churn is a process

When is the best time to find out that your user is disengaged? After they have uninstalled your App? Or when their daily activity first starts dropping?
It’s important not to see churn as the point at which a user is lost, but as the process of losing that user. This allows the measure of churn to be more useful than just a lagging indicator.

A disengaged user usually leaves clues. It’s unlikely they immediately decide to never open your App again. A more natural path begins with a drop in activity:

  • Fewer opens per week or month
  • Decreasing session times
  • Irregular patterns in usage

 

Even after someone stops opening your App, most do not delete it, but simply stop updating and ignore it in a forgotten folder.

There is not much you can do to reengage a user with your App after they have just deleted it -in fact there is nothing you can do if you didn’t get their email or phone registration!. So you need to pick up on the signs and address the problem early. The Streethawk approach is to automatically segment these users.

 

Activity profile of a churning user

Finding the right target

As outlined above, the key is to identify and engage churning users early.

The best way to do this is through defining indicative metrics and using ongoing monitoring and segmentation to make sure the right user receives the right message.

What is an indicative metric?

Begin by looking signals of a drop in activity, such as those listed in the previous section.

We find that usually a good starting point is to target users that have installed within the last 30 days, but have not opened your App in the past 7. By engaging this segment you ensure that the App is still fresh in the user’s mind – they have fallen out of the habit of opening it but you’re inviting them back.

Since different Apps have different timelines of usage, we recommend conducting several A/B tests to find what is most effective for yours.

Two sidenotes to keep in mind:

1) Not all users of your App are the same, so it makes sense to look at churn separately for different groups. For example, if your App supports a premium subscription, losing users from your subscription base is very different from losing your free users. Losing a user within the first 30 days is also very different from losing a habitual user. These groups should be segmented and approached with different tactics.

2) Some level of churn is natural. Your App has a certain audience that benefits from using it. There will also be mismatches between the needs of certain downloading users and your App. Don’t be over-persistent in regaining past users, for example those that have not opened your App for many months or years. That’s just spam

 

Planning your reengagement response

There are several strategies for reengaging your churning users. These are best matched with the right target.

1) Enhance value with a personalised offer

The most effective campaign is one that matches the right user with the right offer at the time and location where they can act. For example, for a game App, you may target your churning customers to give them a hint on a level they are stuck on, or give them some bonus in-game currency. If your App is tied to a retail store, give them a discount on something they like when they are nearby. Finding these perfect moments to delight reignites excitement about your App.

Come back blazing campaign for games

2) Enforce a strong habit of using the App

It’s hard to change a habit. Your App may be exactly what the user needs, but they just find it hard to break their old habits. If this is the case, especially for new users, look at it like a memory game. Excite your users at ongoing intervals to build the pattern of use. Remind them of the potential of your App, or why they bought it. Link them to the case studies of happy users. Give a hint on how to use the App in a new way, or to open up more options.

3) Showcase upcoming developments

Excite users about future releases. New features or extra value may convince them to stick around. However, be sure that these developments are quite close to release, otherwise you may lose the user again in the meantime and it will be harder to win them back. Send them another notification when the update is available.

Related to this, when users start disengaging, they usually stop upgrading the App. This means that they miss out on new improvements that they may have been waiting for. Encourage them to try the latest version and it may win them back

4) Ask for feedback

If users enjoy your App but just find something missing, asking for their feedback and incorporating it into future development will be very likely to keep them engaged. Ensure you have ongoing dialogue with your users and that it is easy for them to get in touch. You should specifically target recently churning users for their feedback. At the least you will gain some valuable opinions on potential weak points in your App.

 

There are multiple options for delivering the message as well. Try building excitement with a video or directing them to a purpose built webpage.

 

Regardless of how you try to reengage your churning users and keep them happily using your App, StreetHawk can help simplify and automate the process. Share in the comments about the creative campaigns you have tried to decrease your churn rate.

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  1. brett rossi
    March 8th

    Can I have your authorization to review this on my twitter?