One of the most difficult parts of building a business out of a mobile app or other technology product is knowing which metrics to pay attention to. This knowledge allows business owners to direct resources adequately and make sure that they are tracking and improving the metrics that will actually move the needle for their business.

Many business owners make the mistake of tracking “vanity metrics.” These metrics can give bad marketers some sense that they are making progress, but in reality, don’t translate to the growth of their business.

To avoid misallocating resources in your marketing efforts, let’s break down some of the key metrics that truly matter and how to improve them.

Here are the tips

1. How to Increase a Mobile App’s Daily Active Users

One of the first steps for many business owners after building their application is to work on onboarding new users. The amount of new users generated, however, is often less important than onboarding users that are actively engaging with the app on a regular basis. This is where the Daily Active Users metric comes in.

This metric is a way to monitor or determine how many people are using your application on a regular basis and can provide a key benchmark that indicates how successful any onboarding efforts are.

An important thing to note with this metric is that it does not reflect the number of sessions generated on an app. A session refers to a specific instance in which a person uses an app. However, a single user can generate multiple sessions. The metric, therefore, provides insight into the number of individual users.

In order to improve this metric, it is key that marketing efforts are laser-focused and well-targeted. An open-ended diffused marketing strategy will have a larger probability of onboarding users that are likely to engage with the app very infrequently and often uninstall it.

Another key point is to make sure to build features into the app that engages with the user frequently. One example might be to send frequent push notifications to app users offering them helpful information, or a reminder to take advantage of some functionality.

According to Techcrunch, one of the best ways to increase the number of users on an app is to focus on simply making the app provide more valuable features.

2. How to Improve Mobile App Retention Rates

A mobile app’s retention rate refers to what percentage of users an app is retaining. This means it can provide insight into how well the app is meeting the needs of users, and how important the features are to the user. Given that modern users have limited storage space on their smartphone, an app that is not meeting important needs will likely be uninstalled.

According to Forbes, one of the best ways to improve retention rates is to concentrate on offering excellent customer service to users.

A sudden change in retention rates can sometimes point towards a problem that might need to be explored. If retention rates drop, for example, after a new feature is introduced, it might be worth taking a look at the necessity of the feature and how it was implemented. Conversely, if a feature removal corresponds to a drop in retention rates, it could be worth reassessing whether that feature was playing an important part in the user experience.

Much like Daily Active Users, retention rates can also indicate how well an app’s marketing efforts are targeted. If users that are not part of the right target market are on-boarded, retention rates are likely to be low. According to Digital Authority, the marketing of a mobile app should be clearly and concisely directed towards the right demographic of potential users.

To calculate an app’s retention rate, divide the number of users who used the app in a set time frame by the number of users who use the app in a previous time period.

If you find that you’re struggling with low retention rates, consider restructuring your marketing efforts to be more targeted, gather data from previous users that have stopped using the app, and readjusting app functionalities.

3. How to Decrease a Mobile App’s Churn Rate

A related metric to retention rate is the churn rate. This metric effectively indicates the extent to which users are ditching your app.

To calculate the churn rate simply subtract the retention rate (as a decimal) by the number 1, and then multiply the result by 100.

The churn rate can determine the extent to which your app is not meeting market demand for your set of on-boarded users. To improve this metric, gather data from users that abandoned the app. Conduct market research to determine the reasons they had for uninstalling.

A high or increasing churn rate means that you may be having a tough time reaching the right product-market fit for your app. If it persists, it could mean that a business owner should reevaluate whether the mobile app is meeting a pressing market demand and to reassess the market research that had hopefully been conducted before the app was built.

However, a high churn rate may not always be cause for panic. It could result from a lack of specificity in user onboarding and targeting. If this is the case, A/B testing adgroups of digital ads to determine which ad and what kind of targeting makes sense could be a good next step.

According to the Harvard Business Review, fine-tuning marketing efforts can often be a more effective approach to reducing churn rates than introducing new software updates.

4. Improving Lifetime Value of Mobile App Users

Lifetime Value refers to the amount of value generated by a single user given the average amount of time that the user continues using the app. There are several ways to look at and calculate this metric, but all of them revolve around showing how much revenue can be expected from each user.

This metric can provide insights into making a business owner’s financial forecasting more accurate. By determining the amount of revenue brought into the company by each user, an app owner can better know what to expect in terms of future profit.

To improve this metric, business owners should take a second look at the monetization model of their app. They should closely monitor which features of the app are producing the best margins of profit. Next, they should consider the conversion rates of all of these paid offerings.

After determining which features produce the most revenue or highest margins, and which features are converting most effectively, an app owner can make high-converting, highly profitable features more prominent. You can think of this in the same way that linkbuilding for dentists, lawyers, and other competitive industries determine which metrics will return the greatest return on investment (ROI).

By increasing conversions on features with solid margins, an app owner can substantially improve the Lifetime Value of users. When making any such changes, it’s important to also continuously monitor any effects those actions have on other metrics such as retention and churn rates.

Improving the metrics that matter for a business centered around a mobile app isn’t easy. But arming yourself with the knowledge of which metrics are worth tracking and which are misleading is the key first step most business owners miss.