If you’ve been involved in the mobile app industry from the beginning you’ve watched as the evolution from paid apps to a freemium model happened — and then witnessed the rush to acquire as many users as possible morph into a focus on retention and recurring revenue. But where does the industry go from here?
On a recent episode of Retention Masterclass, we turned to one of the “superheroes” of retention, Dennis Mink, VP of Marketing at Liftoff, to talk about the logical next steps for the industry.
“I think the excitement of mobile has really passed,” says Dennis. “It’s rare that we see any hot, new, exciting app come out, really kind of any sort. I think TikTok is arguably, not even arguably, the most exciting thing we’ve seen in a long time and I think it’s just like a business more than anything.”
Apps are no longer the territory of plucky, bootstrapped start-ups with CEOs fresh out of college. They are big businesses just like any other. “I think there’s still opportunities for small guys to break into it,” says Dennis, “but it’s so much harder these days.”
Dennis says that Liftoff’s customers “don’t even worry about CPIs” anymore. Rather, “it’s all about conversions against revenue producing events.” He adds, “They’re focused on ROAS, you know, they’re on revenue entirely. So, I think a lot of the sexiness is gone and it’s really about performance more than anything.”
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The user journey: the next phase in mobile
If app marketers are truly focused on ROAS and retaining the best users, that means they’ll have to get focused on user behavior and put a new emphasis on the customer journey.
Dennis says, “I think that maybe it goes without saying at this point, but if you have this mindset of, ‘Hey, I’m going to build an app, it’s going to be successful,’ and you don’t have the right marketing budget, the right marketing staff, the right marketing strategy to actually grow a user base, then I think you’ve got some misgivings there.”
And as important as marketing is in the new app economy, product still plays an integral role. Developers and marketers have to work together to make sure they can answer these questions and
- What’s the core value of your app?
- What are the core features?
- What is the most important functionality?
Once you know how people will get the most use out of your app, your marketing team can set about finding the right users for the services you provide. And, as Dennis points out, finding the right users is what “generates revenue for the business.”
But sometimes, even when you’ve found the right users, they need a little nudge now and then. “We’ve been running re-engagement campaigns,” says Dennis. Whether your potential customers never used your app after downloading it, or maybe they used it for a while and then stopped, it’s important to segment appropriately and re-engage those users that you, very likely, paid to acquire.
The year of retention – or not
For years, analysts and industry insiders asked “Is this the year of mobile?” But today, Dennis says, the question everyone is asking is, “Is this the year of retention?”
His answer to that question might surprise you: “And I’ve got to tell you, we’ve been hosting Mobile Heroes summits for a number of years! With 30 plus, you know, high-value Liftoff customers getting together for three days, candid conversation, and every time it was like re-engagement, retargeting, retention is on. It’s a discussion in the groups and so on. I’ve got to tell you every year it’s like, it’s not the year of retention for the marketers. It’s not.”
Retention is “a hot topic that not a lot of marketers are doing a whole lot about,” according to Dennis.
It’s a controversial statement for Retention Masterclass, but the reason is fairly complicated — as is retention itself. Retention is a collaborative process that has to be at the heart of everything an app company does. From initial development to onboarding to marketing to adding new features, app teams need to keep their users in mind and enhance the journey at every step. Sure, marketers can help you find the right users and then bring them back when their usage drops off — but that’s only part of the solution.
“I think there’s two things that need to get addressed before we will see retention, re-engagement, retargeting, just as a whole become like a larger investment,” says Dennis. “The first is clearly education. Marketers as a whole that manage large budgets, they know UA inside and out, and they don’t really know retention. And so the more educated they become — mostly actually by doing and executing — I think that’s sort of one way in which it’ll start to get addressed.” Translation: Marketers who have been largely focused on user acquisition have to change the way they think and learn new skills to focus on retention.
And the other piece of the puzzle? According to Dennis, “In a lot of the larger app publishers, these larger companies, retention is the responsibility of those that work with a CRM team or department, and not with the UA or the mobile marketers.” These teams are focused on many channels, not just mobile, and don’t necessarily make app user retention a priority.
“Until that gets re-addressed and kind of restructured, I think that we will still see stops and starts and companies really struggling to figure out, you know, what is retention, how do we invest in it? How do we make it work?”
Ironically, mobile retention suffers in large part because mobile marketing teams are tasked with spearheading retargeting and engagement efforts. To learn more about how to fix this problem and finally ring in “the year of retention,” tune in to the full conversation above or read the transcript below.