When it comes to building a successful mobile app, there's no escaping the harsh reality that some users will inevitably stop using your app. This phenomenon is known as customer churn, and understanding it can be a game-changer for any app looking to improve its user experience.

What is Customer Churn?

In simple terms, customer churn refers to users who have stopped using an app. But what's the significance of this metric? The answer lies in calculating the churn rate – the percentage of users that have installed and then left your app within a given time period. This opposite of user retention rate, which indicates how many users installed an app and continue to use it within a specified date range.

Why is Customer Churn Important?

Acquiring new users is only half the battle; understanding why they drop off sooner than expected can give your app a competitive edge. Beyond marketing and product development insights, there are several commercial reasons to pay attention to user churn and retention rates:

  • It costs more to acquire a new customer than it does to retain an existing one.
  • Reducing churn rate can help increase profitability by keeping users actively engaged with your app.
  • Existing customers are easier to sell to than new prospects.

Calculating Customer Churn Rate

To unlock the insights that assessing churn rate brings, you first need to know how to calculate user churn rate for your app. There are a few ways to do this, depending on your desired time period, data set, or use cases.

The simplest way to calculate user churn rate is to subtract the number of users at the end of the period from the number you had at the beginning of it, then divide that by the number of users at the beginning of the time period. This formula looks like this:

(Users at start – Users at end) / Users at start

For example, if you had 1,000 users at the start of last month and 900 at the end of it, your churn rate would be 10%.

Alternatively, you can calculate monthly, quarterly, or annual churn rate in detail by selecting a time period and gathering three additional metrics: users at the start of the time period, users added during the time period, and users lost during the time period. The formula looks like this:

(User lost) / (Users at start + Users added)

For example, if you had 10,000 users at the start of the year, added 1,500 new users, and lost 1,000, your annual churn rate would be 8.7%.

What is a Good Churn Rate for Mobile Apps?

Broadly speaking, a good user churn rate should match or surpass what's seen across similar apps in the marketplace. According to recent app retention rate industry benchmarks, the average retention rate on the day of installation is 25.3%. After 30 days, this drops to just 5.7% of users retained.

Of course, churn and retention rate benchmarks will also vary widely depending on the category – for example, mobile games retain 32.3% of their users on Day 1, with 4.5% retention by Day 30.