• by Aditya Vempaty , March 17, 2016

From video streaming moguls like Netflix and HBO to social media giants like Facebook, entertainment companies are developing apps in droves, and consumers are spending a good chunk of their time on them. But despite the growing number of apps in the marketplace, smartphone users access on average about 27 apps per month, with 70% of total usage coming from the top 200 apps. What does this mean? Millions of apps flood the app store every day, but users aren’t changing their preferences. Competition is getting stiffer, and it’s getting more and more difficult to stand out from the crowd.

This spells trouble for entertainment marketers who struggle to bring their product into the spotlight amidst all the noise. The key difference between the successful marketer who can drive users and revenue and the unsuccessful one that drowns is whether or not the right steps are taken to acquire and retain users.

Say you launch a new music streaming app. It’s the trendiest way to listen to new music, as the successes of Spotify, Pandora, and now Apple Music have shown us. How will your hip new app compete with these giants? You may start out by paying for marketing campaigns on a couple different social networks. You reach out to the press with well-written pitches. You try to get featured on the App Store. Why are you doing all this? Downloads, downloads, downloads.

If you’re lucky, you may see that initial spike in download numbers, but even then, it’s too early to celebrate. There’s data that shows that the average app loses 90% of its users within 30 days. You may never see another user return again.

So how do you effectively market your app to audiences that will actually keep coming back? 

1. Start by identifying your user retention.

How many of the users that you spend so much time and money acquiring actually continue using your app? Your “Day N retention” will give you the answer. Day N retention reflects the percentage of users who come back and do any action in your app “N” days after they start using it. If you calculate Day N retention for the cohort of users who starts using your app on a certain day, over a series of days, you can create a retention chart like the following:

and turn that into a retention curve:

Now you can see exactly when your users are dropping off and how many are sticking around for the short-term and long-term.

2. Understand what your users are doing.

From the moment that users sign up with your app, they make hundreds of decisions and exhibit countless little behaviors that all lead towards their decision to stay or go. These behaviors could be anything:

• using core feature X but not using core feature Y

• engaging only with notifications of type Z

• connecting with 1-2 people on the app, not 10+

To grow your app’s user base you have to figure out which behaviors are being exhibited by the users that stay. What actions are correlated with users being retained? What actions reduce user churn? To answer these questions, you need an analytics tool that lets you do behavioral cohort analysis. ‘Cohorts’ in the typical sense are users that download an app on a certain day. A behavioral cohort is a group of users who perform a certain actions or sequence of actions.

Here’s an example. Suppose for your music streaming app, you can create a behavioral cohort of users who favorited three or more songs. Does this initial engagement correlated with better long-term retention? 

Turns out, it does. While 50% of all users churn within one day of using the app, only ~15% of users who favorite 3 or more songs churn out after day 1. There could be something about favoriting songs that keeps people around.

3.  Take action on your insights.

Once you’ve identified something interesting about your users’ behaviors, the next step is to take action and test whetherthese insights are useful. If you could encourage users to favorite 3+ songs within the first few days after download, would your overall user retention increase? You could try A/B testing different onboarding flows that bring the “song favoriting” feature to the forefront, or have your users receive a default notification when their connections perform the action. Perhaps you could also entice this cohort of users to re-engage with a push notification. Eventually, you may even decide to drastically re-orient your marketing campaigns around these insights and target different audiences. 

In the midst of all the noise, if you want your entertainment app to stand out in the crowd, these three steps are critical: 1) diagnosing your app’s retention, 2) performing behavioral cohort analyses on your users, and 3) making changes based on your insights. This is how you keep your existing users and how you acquire new ones.