User retention refers to the ability of an app to maintain its number of users over a specific period. It measures the percentage of users who continue to use the app after their initial installation. A high user retention rate indicates the app’s ability to engage and provide ongoing value to users, an indicator of the app’s financial viability.

Calculating the user retention rate

The following is the formula for determining the user retention rate:

User Retention Rate =  (Number of Users at the End of a Period / Number of Users at the Start of a Period) x 100

So, for example, if an app has 1,000 users at the beginning of the month (start) and 800 users at the end of the month (end), do the following to get the retention rate:

• Divide 800 by 1,000. 
• Multiply the answer you got above by 100. 

From these operations, you will get a retention rate of 80%.

The importance of having a high user retention rate

Having a large number of loyal users (high retention) provides the following advantages to app developers and app publishers:

• Reduced acquisition costs. Attracting new app users often involves significant marketing expenses in the form of ads, social media posts, etc. High user retention minimizes the need for constant user acquisition, especially if the high retention rate is due to a positive overall user sentiment. The happier the users, the more likely they will make word-of-mouth recommendations.
• Monetization opportunities. As loyal customers are more likely to try new products, retained users are more likely to explore and engage with paid premium features and in-app purchases, increasing the potential income of app developers or app publishers.