What is App User Lifetime Value and How to Increase It?

Developing a mobile app is only the first (indeed crucial) step to boosting your business. But have you strategized what happens after people install your app? Increasing customer lifetime value (LTV) is equally, or perhaps more, important than driving installations. You sure don’t want people to uninstall the app after using it once? Then it’s time to focus on boosting user lifetime value.

Not sure what LTV is? No worry. Today, we will discuss the concept of user lifetime value and explore how to maximize it.

What is User Lifetime Value in a Mobile App?

App user lifetime value denotes the total value of a user for a business. From paid subscription to referring to other users - everything is included in it. LTV offers a holistic view comprising monetization, shareability, and retention rate. Let us take a quick look at these:

•  Sharability - It takes the shareability or virality of the app into account. You can identify how many users are brought by each user over a specific period of time.

•  Retention Rate - It denotes the percentage of people who continue to use your app over a specific period of time. It also considers how much time users spend on your app or user engagement.

•  Monetization - It refers to the amount of money the users spend on an app over their lifetime or Average Revenue per User (ARPU). For an eCommerce app, it takes order values into account. Other monetization methods include PPC campaigns (where the business owner earns money from the ad owner as the users click on it), paid subscriptions, in-app purchases, etc.

How to Calculate User Lifetime Value

Here, you have to multiply the average amount of revenue brought by each user by the time they use your app. Then add the extra value brought in from referrals. Here is a quick formula:

Average LTV = ARPU x 1/Churn rate + Referral rate

(Churn = 1 - retention rate)

Your aim should be to increase user lifetime value. Below, you will find some handpicked tips recommended by a renowned app development agency to boost user lifetime value.

How to Increase User Lifetime Value in a Mobile App

Here, we will elaborate on three components of lifetime value.

1. Sharability

Today, with numerous apps around, people prefer to listen to their peers’ recommendations. Here’re a few ways you can drive more shares.

• Incentivizing the users to share your app is a great trick. They will do something to get something in return. For instance, you may offer in-app bonuses or credits when a user refers a friend through social media.

• Offering something unique on the app will automatically compel people to share your app. Therefore, pay attention to that.

• You can also create an illusion of celebrating the users’ activities on your app. For instance, you may encourage them to share your gaming app when they cross a hurdle or win a puzzle.

• It’s also important to optimize your brand presence on social media. You can engage digital marketing services to spread brand awareness, manage brand reputation on different forums, and so on. All these will lead to evoking a positive impression in people’s minds and drive more installs. And the more installations your app gets the chances of virality through the existing user base increase. 

Before jumping to the next pointer, let’s quickly mention that you must enable people to directly share the app from inside the app. For that, it’s important to integrate popular social media APIs into your app.

2. Retention

The first step to increase retention is to analyze why people delete an app. Precisely for two reasons:

1. They got a better app to meet their purpose
2. They find the app to be confusing or boring

Focus on these two issues and you can significantly reduce the chunk rate. So, how to do that? We will explore below.

• Improve app onboarding experience. Introduce people to the features of your app and encourage them to perform some activities to get started. These may include dragging a feature, swiping through something, and so on.

• Make sure your app is intuitive enough so that people can easily understand which button or feature functions in which manner. The sign-up process should not be long or tedious. Encourage one-tap login with email/social media account or phone number.

• The sign-up process should not be long or tedious. Encourage one-tap login with email/social media account or phone number. 

• Keep data fields to the minimum. Make sure that the users need not fill a lengthy form. If yours is an eCommerce app, ensure that the checkout process is fast. Also, let the users save their card/connect with their UPI app as their preferred payment model for future shopping. It will save time and effort.

• Equip your app with all the essential features required to execute an activity in your specific niche. If required, check your competitors’ apps.

• It’s better to provide some more features in your app than your competitors. That way, it will stand out among the rest. For instance, if yours is a chatting app, consider why people will use it instead of WhatsApp or Telegram? What extra features can you provide?

• A/B testing is a great way to find out which elements are preferred to the users. Optimize your app accordingly.

• Engage maintenance services in a consistent manner so as to keep your app glitch-free and high-functioning at all times.

3. Monetization

Some of the proven ways to monetize your app include:

• Leverage push notification to encourage people to interact with your app and convert. For that, you need to send personalized push notifications to the users. You can track geo-locations of the users, their browsing/purchase history, and wishlist to customize the notification message.

• No matter how alluring it seems, always feature native ads on your mobile app. For instance, if yours is a food delivery app, featuring an ad of a bakery is a smart step. Native ads will not irritate people and these may even encourage them to click. That way, you can earn from the ad owner.

• Instead of encouraging people to purchase the app while installing it from the app store, it’s better to rely on in-app purchases. With so many apps available in the market, people may not be interested to purchase an app. On the contrary, as they get addicted to the app, they may want to unlock other features (say, earning virtual coins or lives, or unlocking some tracks) via in-app purchase. This is closely connected with purchasing the premium version of the app that offers more features.

By adopting these strategies you can significantly increase user lifetime value in your mobile app. Try these and share your thoughts with us.