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Loyalty & Retention

App Marketing Conversations: Predictions 2014

Ezra Siegel  //  January 31, 2014  //  10 min read

2014 is the year of customer retention and engagement

In this installment of App Marketing Conversations we talked about our retention and engagement as metrics of rising importance that will be making a major splash in 2014. Retention is currently undervalued as many mobile apps continue to focus on user acquisition, however in 2013 user acquisition costs hit an all time high. For the majority of mobile apps, continuing to spend money on user acquisition is not a sustainable option and retaining the customers you already have will become a priority.

Tune into the video below to learn why retention is going to grow in importance in 2014 and how you can improve retention for your mobile app.

Robi: Welcome to App Marketing Conversation’s Predictions Version for
2014. As always, I’m Robi Ganguly from Apptentive. We’ve
 got Ryan from GameHouse and Ian from MobileDevHQ.

 So we’ve talked about user acquisition. We’ve talked about app store 
optimization, sort of things that are changing, predictions for the market
in 2014. In this segment, we’re going to talk about engagement and
 retention, sort of as an umbrella.
 But really, I was wrong last year. I said this was going to be the year of
 retention. I was wrong, sorry. My prediction was false. I’m going to try it 
again, though.

I really believe it’s undervalued. I think that everybody needs to focus on keeping more of their customers, and as we talk about how expensive it is and required customers and how busy the market is, keeping them becomes much more important to the bottom line.

 So I’m going to say it again. I think 2014, big deal, retention. But we’ll 
see if this time next year, I have to apologize as well. Would you
 agree, though? Do you think retention’s important?

Ian: Do I think it’s important? Yeah, absolutely. Like, if there’s anybody 
out there who thinks it’s unimportant, they need to go get a new job.
You’re kind of screwing it up here. So I guess, like, the better question 
for me is, where are the risks of retention not being important, or not
 growing in 2014 to be super important?

 And honestly, I think the biggest risk is that it’s simply easier to just
spend money to acquire that right now, than it is to actually get smart 
about how to retain. It’s a much harder problem. It’s a much more valuable 
problem, so you should be investing in it. 

But it is, realistically, a hard problem. And that to me, that’s the only 
thing that’s potentially going to hold back retention in 2014 is that it is
a hard problem. And luckily, there are smart people thinking about it that 
you can ask for help.

Robi: Yeah.

Ian: Everybody. But that to me, that’s the big risk.

Robi: Yeah. What about you? What’s your opinion on retention?

Ryan: Yeah, I think it’s a big problem and I think a lot of people need to 
fix it. I think it’s important to break it out into two buckets. Do you 
have the tools enabled, like your product, to measure retention and try to
engage users on an ongoing basis? 

And then the second part is, is your product worth being retained?

Robi: Yeah.

Ryan: Because I think, and we’ve talked a little bit about this before, 
that there’s some amount of psychology behind burning through users and 
just buying more that’s detrimental to the ecosystem, and it’s detrimental 
to your business.

 But I think your point, and Ian said it perfectly well, was smart people
 that are rational kind of move beyond that and say, “Do we have a tools 
problem, or do we just have a pure product problem?”

 Because I think he’d probably be the first person to admit, all the
 retention tools in the world can’t help you if your product isn’t very
good.

Robi: So I think, let’s get into more detail on that. So retention, big
 umbrella, that’s really big. I’m going to say it’s the biggest deal for
2014, and I hope you agree. But how do you get better? It’s not just about 
tools for retention.

Your app actually has to be better. In this day and age, when there are a 
million apps in each marketplace, it’s not okay to have a four-step login
 process, right?

Ryan: No.

Robi: But…

Ryan: I don’t want any login process.

Robi: We see so many apps that, the first time I get into them, I get no 
value and I just have to log in. So how do people get better at this? And I 
think a lot of that has to do with looking at the app store reviews ,
understanding what people are saying, talking with your customers, hearing
 what their experience is.

 You know, overwhelming theme is, if you’re not listening, you’re doing 
poorly. What else can people do to get better, though?

Ian: Yeah, so I mean, everything that you just mentioned to me just sounds 
like data, right? Are you looking at the data? And so, the first thing, so
 we’ll take that login example. If you look at your seven-day retention or
 one-day retention with a four-step login process, and you see that it 
sucks, change it.

 Make it a three-step login process, then look at that one-day retention.
Then, because it’s most likely going to suck, keep changing things and 
measuring them in their time cohorts, or whatever you want to call it, to 
track that progress until you get your individual pieces of your retention
to the point you want them.

Ultimately, it always comes back to the data. What does the data tell you 
is happening, and do you at least have a gut feel on what you can change t o
improve that data?

Robi: Okay.

Ryan: Yeah, I agree.

Robi: Okay. Pretty straight-forward. Great. Let’s move on to another
 aspect that I’m always harping on, because I think people, when they think 
retention, they think push notifications. And I think push is definitely 
useful, right?

But now we’re starting to see many companies talk about good push.

Ian: Yeah.

Robi: Which I think it’s kind of hilarious that we have to create the term 
”good push.” It says something’s gone wrong, right? And I think the thing 
that’s gone wrong is that more and more companies are like, “Okay, let me 
just talk down my customers, and that’s just going to make them open up my
 app and come back and play with it.”

And I think the reality is, because this happens for me, I don’t know about
you guys. I get pushed a lot around something, I just turn off push for 
that, and then maybe, if I can’t figure out in 27 seconds how to turn off 
push, I just delete the app.

Ian: Yep.

Robi: Does this happen for you?

Ian: Totally. So I have an example of good push that I like, and an example 
of bad push that I hate. So my example of good push is ESPN.

Robi: Yep.

Ian: I actually think ESPN SportsCenter app…

Robi: Totally.

Ian: …does a great job there. It’s pretty infrequent, usually a couple
 times a week. Sometimes there’s big deals that happen, and simple stuff,
 I’m like, “Oh, that is actually interesting. I want to read about it if I
 care about it.”

It looks like some of it is personalized. I can’t quite tell, but it 
definitely seems like it’s taking my favorite teams. So I see more things 
about Michigan teams and Detroit teams, so that’s good push.

 And then bad push is Deer Hunter. Freaking Deer Hunter, it’s the worst.
 Honestly, the game is actually really fun. It’s like Big Buck Hunter is fun 
at a bar. Deer Hunter’s kind of fun too, right? And I don’t like hunting.

But Deer Hunter’s like, they’re doing push to me at least once a day.
Usually it’s like, “There’s a sale now for this gun.” And I’m like, I’m
never going to purchase a gun on your app. That’s not me. You know this
 about me.

And it’ll be like, “It expires in three hours.” And then three hours later,
they send me another sale. I’m like, this is a terrible, terrible
 experience for me, and I just ended up deleting it.

Robi: Yep.

Ryan: Yeah. I think the interesting…push notifications and email, right?
S o let’s think about that for a second. So it’s interesting to me how 
personal your mobile device has become compared to your computer. Email 
used to be the ultimate personal thing, right?

 How many times, when you sign up for something, do you give out your email? 
Lots of times, you go to a store and they’re like, “Oh, can we get your
 email address?” You’re like, “No, no, no, don’t touch my email.”

Ian: No, huh-uh.

Robi: Right.

Ryan: But you still end up getting signed up for a lot of shit, and now,
we’ve gotten kind of used to saying, “No, no, no, unsubscribe, unsubscribe,
unsubscribe.” And I think your phone is an even more personal experience.

 And when the push notifications end up being so intrusive, it’s really bad.

Robi: Yeah.

Ryan: Right?

Ian: That’s a good point.

Ryan: And I wonder, I think the question is whether or not that feedback 
loop exists to say, “Hey, Glue, who’s doing Deer Hunter, your push 
notifications are actually leading to deleted apps.”

Ian: Right.

Ryan: I mean, I don’t know, but I hope so.

Ian: Well, it’s interesting. Equating it to email is a good point. So email 
is my past life, and there are all sorts of feedback loops that go on in
email.

Ryan: Yeah.

Ian: So, you know, in email, a, I find out how many people open.
Presumably, you can find out how many people open push, if you’re doing 
push in any meaningful way.

Ryan: Yeah.

Ian: But you can also find out things like, if somebody hits “report spam”
in AOL or in Gmail or in Yahoo or whatever, that actually goes. You can 
sign up, as the marketer of that email, to find out who did that and how
 many people did that and when they did it for what email.

Ryan: Yeah.

Ian: And the ISP or the ESP will actually send that back to you. And so
you’re like, “Well, push should have this built in as well.” And then you 
think about it from the spam perspective. It’s like, do the platform owners
 actually have a responsibility here as well to say, “We’re going to make a
spam box of push,” right?

Ryan: Yep.

Ian: In my email, I have a spam box, and Gmail takes care of 90 percent of 
this shit.

Ryan: Yeah.

Ian: Do I need that in push as well? And does Apple need to build that for
me?

Ryan: Yep. Well, I wonder if there’s an even simpler thing, is when you get
a push notification, it’s like, I can’t remember what it says. Close, open.

Ian: Yep.

Ryan: Maybe there should be another one, unsubscribe?

Ian: Totally.

Ryan: Because I think it’s unfortunate for companies like Urban Airship who 
have built such good products that people just still…I mean, they’re
trying to educate the market how to do this right, what to use, what to not use.

 But people are just…

Ian: It’s the same thing with email, right?

Ryan: Yeah.

Ian: It’s a very similar paradigm there where email is like, people have 
built really good businesses on email and people have built really shitty 
businesses on email.

Ryan: Yeah. Well, your point about Deer Hunter’s really interesting,
because I notice that, I somehow got on J. Crew’s mailing list and Bonobo’s 
mailing list, right. Two close companies.

Robi: Somehow.

Ryan: Somehow haha. Whatever. And every day, I get
something new, like 30 percent off this, 30 percent off this, 30 percent 
off this.

Ian: Right.

Ryan: And I think you just get numb to it. It’s like, “Great, there’s a
sale,” right?

Ian: Yeah.

Ryan: Sales are intended to be scarce.

Ian: Yeah.

Ryan: Right? And so if you’re using push notifications to talk about a sale
every couple hours, you’re doing it wrong.

Ian: Yeah.

Ryan: You know?

Robi: Exactly, and I think it comes back to, you know, a previous 
conversation we had where the ease of spending money sometimes outweighs 
thinking about organic. So the ease of sending out push overwhelms that
investment in talking with your customers, right?
 So that’s one of the things I think, if you’re a marketer and you’re
figuring this out and you feel like you want to do good push or you want to
be kinder and gentler out in the mobile world, which seems like it’s
 getting more abusive, you’ve got to talk about how to listen to your
customers, how to talk with them and have conversations.

And your tools have to have metrics on if that conversation was desired,
right? If you’re doing push and you’re not understanding how many people
 are unsubscribing, you probably shouldn’t do push until you get that
 metric.

Ryan: Yeah.

Robi: That’s required in closing that loop, because if you don’t know that
you’re being spammy, what are you going to do? You’re just going to piss
off a whole bunch of people. So I think that’s a big deal for 2014 is 
getting smarter about when people don’t want to hear from you, and figuring 
out, maybe there’s an unsubscribe button that can be added to push or
 something, right?

Ryan: Yeah. Well, you really brought up an interesting point. There can
also be, if you’re only looking at some pieces of the data, you can mask
the scary things.

Robi: Yes.

Ryan: So you can see a scenario, and I guarantee you this happens, where
you send out a push for a sale and your sales spike up.

Ian: Totally.

Ryan: But what’s not being shown…

Robi: Yes.

Ryan: …is the number of people who stopped subscribing to your push 
notifications.

Robi: Right.

Ian: Yeah.

Ryan: So then the next time you do a sale, it’s going to be like this.

Ian: Yep.

Ryan:If you keep it up, you know, they’ll 
slowly start having less and less of an impact because the number of people
 subscribing has gone down.

Ian: And so, when I worked in email, the way that we often thought about 
that was, we were always recalculating the lifetime value, the average
 lifetime value, of an email user.

Ryan: Yeah.

Ian: And then, for every spam notification or opt-out that we got, we knew 
how many sales you got from the opens of an email and the clicks of an
 email that led to sales, and so that drew our line up. 

And then we actually subtracted that back down by the number of people who 
opted out times their lifetime value.

Robi: Yeah, that’s exactly how you should do that math, right?

Ian: Yeah.

Robi: But I bet you there’s not a single person who’s watching this right
now who’s doing that math. And part of the problem is, I bet, the tools
 don’t have them. So that’s a place to push everybody this year, is to have
your tools, have the entire picture…

Ryan: Yeah.

Robi: …of what your marketing communications, what your conversations 
are doing to the lifetime value of your customer base.

Ryan: Well, so I want to add more point here, too. I know you’ve probably
 got to wrap this up. But we’re in year four of the app store, four or five, 
right?

Robi: Five, yeah.

Ryan: And web and email, we’re in year 20.

Ian: Sure.

Robi: Yep.

Ryan: Right? So it’s amazing how fast all of this stuff has happened in
 mobile compared to how it happened in the web, right? So at year five in
 the web, we were so much farther behind than we are now.

Ian: Year five of email, we were using Pine.

Ryan: So, you know, we’re not that far away from mobile and apps totally
catching up to the web in, let’s call it in a seven-year cycle where it’s
taken the web 20 years or something.

Ian: Right.

Ryan: It’s really interesting.

Robi: Yeah. All right. So that’s the end of our predictions instalment. Be
sure to check out the other ones on user acquisition and app store
 optimization if you haven’t already. And like this and share it with your
friends. Thanks.

About Ezra Siegel

Ezra is the VP of Community at Apptentive. He is a Chicago Sports Diehard and loves travel. Some day he would he plans to visit every country in the world. Connect with him on Twitter, LinkedIn, and Google+ .
View all posts by Ezra Siegel >

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