How can you use retention curves to measure your mobile app lifetime value?

1 What are retention curves?

Retention curves are graphs that plot the percentage of users who return to your app on a given day, week, or month after their first session. For example, a retention curve for a day might show that 50% of users who installed your app on day 0 came back on day 1, 40% on day 2, 30% on day 3, and so on. Retention curves help you understand how loyal and engaged your users are, and how long they stick with your app.

2 Why are retention curves important for LTV?

LTV is the total revenue that you expect to earn from a user over their entire relationship with your app. It depends on three factors: the average revenue per user (ARPU), the retention rate, and the churn rate. The retention rate is the percentage of users who stay with your app over a period, and the churn rate is the percentage of users who leave your app over a period. Retention curves help you estimate these rates, and thus your LTV.

3 How to calculate LTV from retention curves?

To calculate LTV from retention curves, you need to multiply the ARPU by the cumulative retention rate over a period. The cumulative retention rate is the sum of the retention rates for each day, week, or month in the period. For example, if your ARPU is $1, and your retention curve shows that 50% of users come back on day 1, 40% on day 2, and 30% on day 3, then your cumulative retention rate for the first three days is 50% + 40% + 30% = 120%. Your LTV for the first three days is $1 x 120% = $1.2.

4 How to segment retention curves by user groups?

Not all users are the same, and they may have different retention patterns and LTVs. To optimize your app for different user groups, you can segment your retention curves by various criteria, such as demographics, behavior, preferences, or acquisition channels. For example, you can compare the retention curves of users who signed up with email versus social media, or users who completed a tutorial versus those who skipped it. By segmenting your retention curves, you can identify which user groups have higher or lower retention and LTV, and tailor your app features and marketing strategies accordingly.

5 How to improve retention curves by app features?

Another way to optimize your app for LTV is by testing and improving your app features that affect user retention. For example, you can experiment with different onboarding flows, push notifications, rewards, or content updates, and see how they impact your retention curves. You can use tools like A/B testing , cohort analysis , or funnel analysis to measure and compare the effects of different app features on user retention. By improving your retention curves, you can increase your LTV and grow your app business.