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7 Mobile App Metrics to Track the Real Profits Made by an App

Dec 2, 2017 4:15:07 AM

Mobile apps and games are an ever-evolving market. With rapid innovations, increasing market penetration and growing usability smartphones have become the center focus of many business initiatives. Due to this popularity, many apps are developed with the aim to monetize this growing smartphone user base. Games and e-commerce, in particular, are designed to leverage these capabilities of mobile apps. But how will you know if you are making money from the app or losing it? It is a possibility that even when you think that your app is giving returns you might be spending a lot more on its maintenance and updates, thus incurring a loss. There are many mobile app metrics that give insights in the KRAs (Key Result Areas) that if managed properly can help you improve the financial prospects of your app. In this blog, we have listed 7 app metrics that you should track to keep a check on your app’s financial position.

7 Mobile App Metrics to Track an App’s Financial Position:

1. Funnel Tracking:

funnel.jpg

Funnels track the user’s behavior starting from acquisition to conversion. Most of the analytics tools come with conversion tracking with a focus on key events like referrals, subscriptions, and purchases. You can also create custom conversion events to track the metrics according to your business requirements. By monitoring your users’ activities through this funnel, you can study the number of steps they take to complete a conversion event. You can also measure the churn rate (number of people moving out of funnel) at every stage of the funnel.

With this data, you can identify stages with high churn rate and take steps to improve your conversion rates. Funnel marketing isolates problems and helps eliminate them with ease. Some common steps to optimize funnels include offering incentives to users, reducing the number of steps etc.

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2. Average Revenue per User:

ARPU = Total Revenue / Number of Users

Average revenue per user (ARPU) is average revenue generated per user by your app. This is an important metric for investors since it offers insights into the financial position of your mobile app. A frequent problem faced with ARPU is its tendency to skew drastically due to some high performing users. This issue becomes more pressing if the number of active app users is very few. To maintain accuracy, you need to remain familiar with the data and make sure that outliers aren't skewing your average.

 Read More: 10 Metrics to Measure User Engagement on Mobile

 

3. AOV and AOV per Paying User:

The average order value (AOV) is the average revenue generated by your app users. On the other hand, the average order value per paying user (AOV per paying user) is the average value of the order placed by a paying user. These app metrics are quite important in eCommerce apps. Mobile apps relying on in-app purchases should also be tracking this metric.

AOV = Total Revenue / Number of Orders

The AOV gives insights about the users who are not converting into paying customers. AOV per paying user suggests the average revenue generated from each conversion. With this, you can know whether you need to implement some strategies to convince paying users to spend more. You can offer additional product or service suggestions at or right before checkout or improve pricing with combos. These last-minute promotions and combo deals can attract users towards higher deal sizes thus encouraging them to pay more. Limited period offers are also a good way to make users indulge in higher purchases.

 

4. Cost per Acquisition:

Cost per acquisition is the average cost incurred on acquiring an active, paying user or a subscriber. The acquisition costs can include anything from the marketing expenses to development costs. Basically, every cost that is incurred for user acquisition whether directly or indirectly falls under this mobile app metric.

Cost per acquisition = Total cost of campaign / Number of Acquisitions

The Cost per Acquisition needs to be adjusted based on the paying model of your app. In case of paid apps, there is a certainty about the revenue earned per download. All you need to ensure is to keep per acquisition costs less than the price tag. On the contrary in case of apps with in-app purchases using this metric gets complicated due to uncertainty about the revenue. In this case, you can take an industry standard acquisition cost as the base and pivot your expenses according to the actual figures. Some popular tools to measure Cost per Acquisition include AdWords, Search Ads, Fiksu, and your analytics package.

 

5. Lifetime Value:

Lifetime value (LTV) is the total revenue generated from a user over his entire usage of the app. Since mobile apps are used multiple times, the user might access it over several years before completely stopping its use. Lifetime value indicates the retention capabilities of your app. Based on the results you can estimate the kind of retention you would require to make your app profitable and guide your efforts accordingly.

LTV of a Customer = Average Profit Contribution x Lifetime in Years - Acquisition Cost

The best way to extend the user LTV is to tailor your app based on the needs of your userbase. Understanding feedback and releasing regular app updates to address common issues and requests help keep the users engaged and gives them a sense of being heard. This behavior from app owners and developers nurtures the user base and makes them feel important thus expanding their lifetime value.

 

6. Revenue Target:

SMART-goals.png

Your revenue target is the target you aim to achieve in terms of revenue from your app. To stay relevant is a promising idea to fix a hard number along with timeline as a goal. This is often called as SMART Goal - Specific, Measurable, Attainable, Relevant and Timely. Setting up SMART goals will keep your efforts on track and guide decision making. It is also important for your investors to know about your goals and your progress towards achieving them. Since this will help build their confidence and secure more funds.

 

7. ROI:

ROI = (Net Profit/Total Investment) x 100

Return on Investment (ROI) is the most important metric to understand the financial prospects of the app. It tells the percentage return on investments made by the app owners after incurring all the expenses and collecting all revenue. ROI is the most loved metrics by investors since it directly puts worth the ability of the app to provide financial incentives.

With the help of above 7 app metrics you can track the exact revenue you are generating from your app. With a clear picture of the current and future condition of your app, you can understand its effectiveness and capabilities and guide your future efforts accordingly.

If you are looking for app developers who can integrate these metrics into your app, develop an app or upgrade your existing app for better ROI then feel free to get in touch. With 10+ years of experience in the mobile industry, we are ready to take up a project of any size. Contact us today.

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Topics: Mobile Applications, Mobile App Analytics

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