9 Most Important Mobile App Metrics You Should Know

You are about to raise funds for your Mobile app business, but aren’t very familiar with the key mobile app metrics investors are asking for? Look no further. In this article, we go through the 9 most important metrics for Mobile apps We explain you what they are, how to assess them and why you should consider tracking them.

Metric 1: Monthly Active Users (MAUs)

Mobile apps are almost exclusively BTC (business to consumer) businesses. Whilst they earn revenue from a variety of sources depending on the business model (subscription, ads, affiliate, etc.), the key revenue driver is the number of users they have. 

Note: Users are generated from Downloads. Yet, users are not necessarily equal to downloads (some users might have the app installed on 2 devices for example). Google and Appstore have their own definitions for the 2 metrics. If you aren’t sure, refer to the definitions on the Appstore and Google Play.

Investors focus on Monthly Active Users (MAUs) as they better reflect the ‘engaged’ user base by selecting only users who interact at least once a month and daily, respectively. Indeed, 77% of users do not use an app anymore 72 hours after downloading it (see here a great analysis on mobile app retention curves).

MAUs are especially useful in a cohort analysis context: for each new user cohort, how MAUs fluctuate over time? They will likely decrease over time as users become less and less engaged, and finally churn. Your mobile app is all the more valuable to investors if you can show users are ‘sticky’: they engage often and for a long time.

For more information around MAUs cohort analysis in product building, see a great article here.

Metric 2: Daily Active Users (DAUs)

Similar to MAUs, DAUs are the number of users who opened the app in a day. It should be read as a percentage of total users:

Daily Active Users (as % of total users) = Number of Users who opened the app in a day / total Users

Metric 3: Stickiness (DAUs / MAUs)

The stickiness ratio gives a clear idea of how ‘sticky’ are your users: how many of your monthly active users are also daily active users?

Stickiness = DAUs / MAUs

So what’s a good stickiness ratio? The closer to 100%, the better.

Metric 4: Virality (K factor)

Virality is a metric on its own for mobile apps. It characterises organic growth: how fast do you acquire users organically? Therefore it excludes any user acquisition via paid marketing (such as cost-per-install campaigns on Appstore).

Viral apps, due to network effects, make or break mobile apps:

• If you have a low virality, your mobile app might fail as it cannot rely solely on paid acquisition which has a cost
• If you have a high virality, your mobile app will take off. You would acquire many users for free (organically). Not only your business will fly, but you would likely have a highly profitable business as you generate revenue without any acquisition costs

So what’s K factor? It has 2 components:

• The number of ‘invitations’ per user: how many people 1 user invites to use the app (via word-of-mouth, referral, etc.)
• Conversion rate: How many invitations convert into a user?

For more information around K-factor, see a great article here.

Metric 5: Average Revenue per User (ARPU)

This one is an easy one, yet very important. It gives a clear picture of how much revenue you generate per user. 

Average Revenue Per User = Revenue / Users

Metric 6: Average Revenue per Paying User (ARPPU)

You might have thousands of users, but a tiny percentage of them might be paying (think freemium model). That is when we use ARPPU (Average Revenue per Paying User), which we usually compare to ARPU.

Average Revenue Per Paying User = Revenue / Paying Users

Let’s assume you have 90% of free users, and 10% paying $100 a month. Your ARPP is $100 per month, yet ARPU only is $10. For more information, see here a great article.

Metric 7: Churn

Another very important mobile app metric is churn. Churn (also referred to as “attrition”) is the number of users you are losing in a given period (usually either monthly or annual).

Churn = (users at beginning of period – users at end of period) / users at beginning of period

Note: You might have heard of retention, it simply is the inverse of churn.

Churn can also be calculated per cohort: assume you acquire 100 new users in January 2021, how many of these users will churn by year-end? That way, we can compare churn over time and assess your retention strategy.

Why does churn matter?

Because churned customers suppress user growth, and to a greater extent, profitability. Indeed, Harvard Business Review estimates that acquiring a new customer is 5-25x more expensive than retaining a one, therefore the need to improve retention and decrease churn.

What is a good churn rate?

Well, mobile apps tend to have high churn rate and, more especially, churns occurs quite early on, as highlighted in the statistics below:

• Across iOS and Android, worldwide retention after 90 days is just 4%
• 90% of people who install an app will abandon it within a month
• The average Android app loses 80% of daily active users within 3 days after install

Of course, churns depends on the type of product you offer and whether you offer a freemium: downloading an app doesn’t cost anything to a user, especially when there is a free plan involved. For that reason, it is not surprising to see annual churn rates of 80% (or retention of 20%) for successful mobile app businesses. As long as your user growth is higher than churn, you are growing.

Metric 8: Customer Lifetime Value (LTV)

Like any other business, mobile apps can calculate their customer lifetime value (“CLV” or “LTV”). 

Indeed, customer lifetime value is the result of your net margin per customer (usually gross profit) and the average lifespan per customer. Let’s use a simple example:

• Your net margin per customer (for instance, if you sell a $30 subscription to a mobile app gym membership and make 50% gross profit, your net margin is $15 per customer per month)
• The average lifespan of your customers: simply divide 1 by your churn (see here an article on how to easily calculate it). Let’s assume your average annual churn is 20%, this means your average customer churn after 5 years.

Based on our gym membership example above, the customer lifetime value would be $900 ($12 x 12 months x 5 years).

Metric 9: Customer Acquisition Cost (CAC)

Calculating CAC is very helpful to get a clear idea of the profitability of your acquisition strategy: that is why we usually compare it to Customer Lifetime Value (more on that later).

Indeed, whilst LTV captures your gross margin per customer, gross margin does not take into account customer acquisition costs (which are by definition below Gross Profit and above EBITDA).

CAC are all the costs associated with the acquisition of your customers, for mobile apps it usually is any marketing expenses, and more especially paid ads campaigns (think Cost per Install on Appstore and Google Play).

Let’s use our gym membership example above: assume you acquired 100 new customers in June 2021, yet you spent $25,000 in sales & marketing. Thus, your CAC is $250, meaning you spend in average $250 to get 1 new customer. 

Now, let’s compare CAC to LTV: on average you spend $250 per customer, and earn $900 over her/his lifetime. You then have a profitable business, even if the $30 monthly subscription results in a loss in the short term (you spend one-time $250 in June 2021, but only earn $30 revenues a month). 

2 very important mobile app metrics to use when comparing CAC to LTV are:

• CAC Payback: how quickly will you recoup your initial investment? Approximately 17 months using our example above ($250 CAC / $15 Gross Profit per customer)
• LTV:CAC: how scalable is your business? Circa 3.6 times ($900 / $250)