5 Conversion Metrics You Should Track For Mobile App Growth (Part 1) | Happy Nine To Five

Thursday, 17 September 2020

5 Conversion Metrics You Should Track For Mobile App Growth (Part 1)

When you're promoting a mobile app or game, there are hundreds of metrics you can look at to assess campaign performance across channels and understand how people are interacting with your app. 

After all, growth is all about data - diving deep into the customer funnel and using the data you have to see what's working and what's not, identify what channels are worth investing in and find ways to reduce customer acquisition costs down (the ultimate goal for advertisers). 

These are some of the most important conversion metrics I think you should definitely track if you're focusing on growing your mobile app and generating revenue and customers (not just app users).

1. Customer Acquisition Cost (CAC)

This metric goes beyond basic campaign performance and shows whether a company is achieving growth in a cost-efficient and sustainable way.

It takes into account how much the business has spent in total on acquiring new customers over a period of time, including costs like marketing spend, tools and sales commissions.

CAC is calculated as the total amount spent divided by the number of acquired customers in that period. 

It's one of the most important KPIs across the business, and particularly important for investors as it assesses profitability and how cost-efficiently you can scale growth.

The lower the number is, the better, as this means you are spending your marketing budget effectively and focusing on acquisition channels you're getting a higher return on investment.

And as long as your customer value (how much your customers spend through the app) is higher than your acquisition cost, you are making a profit.

2. Conversion Rate (CR

This represents the total number of mobile app users who have completed an action that's valuable to you - made a purchase, signed up for a subscription, or completed a trial. 

This is one of the best ways to measure campaign performance and understand if your campaigns are optimized to bring you the results you care about. It will also help you identify if your messaging and landing pages are resonating with your target audience.

There are a few different ways to calculate the conversion rate, depending on your goal, the platform you're running your campaign on, and the data points you're using. 

You can base your conversion rate calculations on mobile app installs, the total number of people reached, or the number of people who have engaged with your app in a specific way.

For example, if you're running an acquisition campaign on Instagram using App Event Optimization, and using Purchase as your desired conversion event, this means you're after users who won't only install your mobile app, but who will also complete an in-app purchase.

In this case, your conversion rate is calculated as the total number of conversions (purchases) divided by the total number of app installs.

So if your campaign has generated 2,000 mobile app installs and 800 of those users have also completed a purchase, your conversion rate is 40%.

If your campaign was simply optimized for mobile app installs, you would calculate your conversion rate as the total number of app installs divided either by the total number of people reached, or the total number of people who clicked your ads (click-to-install rate).

In comparison, if you're running the same type of campaign on Snapchat, you would calculate your conversion rate as the total number of app installs divided by the total number of swipe-ups.

3. Purchases and Revenue

On all major advertising platforms, when you're optimizing your campaigns for conversions, you are not only looking for users to download your app but also to move through the funnel and complete in-app purchases or other conversion events that are valuable to your business.

For most mobile app publishers, In-App Purchases and Revenue are the main types of conversion to focus on if you're striving to drive business growth. 

These metrics will show you how well your campaigns are performing, and whether you're targeting the right audience on the right platform to drive a significant amount of conversions to justify your ad spend on that platform.

If purchases and revenue don't measure up to your targets, first consider fine-tuning your audience and zoning in on specific segments of customers that are more likely to complete purchases in your app, then think about how you can adapt your message based on where your customers are in their journey.

4. Customer Lifetime Value (CLTV)

Another very important metric to measure if business growth is your ultimate goal. It tells you how much revenue you should reasonably expect to generate from a customer throughout its lifetime. The longer a customer continues to purchase from you, the greater their lifetime value becomes.

You can use this metric to identify the most valuable customer segments that you should go after.

Also, by measuring LTV in relation to CAC, you can identify how long it will take you to win back the investment required to acquire a new customer.

To calculate the lifetime value of your customers, you first need to identify four metrics: average purchase value, average purchase frequency rate, customer value and average customer lifespan

  • Your average purchase value is your total revenue divided by the number of purchases in a time period.
  • Your average purchase frequency rate is the number of purchases divided by the number of customers in a time period.
  • Your customer value is the average purchase value divided by the average purchase frequency rate.
  • Your average customer lifespan is the number of years a customer continues to purchase from you divided by the number of customers.

To determine your CLTV, multiply your customer value by your average customer lifespan. The number you get represents how much you can reasonably expect a customer to generate for your company over the course of their relationship with you.

5. Return on Ad Spend (ROAS)

This metric measures how much revenue you generated compared to how much money you've spent on an advertising campaign. 

It's used specifically to measure the effectiveness of one ad campaign, compared to ROI which is a broader metric and looks at the total return on investment on that channel. 

ROAS is calculated as the total revenue generated by a campaign divided by the total advertising costs.

You can look at ROAS and ROI together to see how much revenue each advertising campaign is generating on each channel - since you might be running the same campaign on multiple platforms and see different performance and results.

This will help you identify your most effective acquisition channels and the most effective types of campaigns, which in turn will give you the confidence you need to make data-driven decisions about when and where to shift budgets if one channel or campaign doesn't perform as well as you expected.

When considering what channels to invest more in, don't let the customer acquisition cost be the only determining factor. Pay attention to the quality of app users and whether they have a higher LTV. 

Even if it's more expensive to acquire them via a specific channel at first (LinkedIn being more expensive than Twitter, for example), if they turn into high-value customers who make regular purchases, then it's a channel worth investing in.


Tracking these metrics will give you a more detailed picture of your marketing efforts and show you if you're getting a good return on investment from your campaigns, and will also help you identify areas for improvement.

In the second part of the article, I will focus on the most important retention metrics you should track to improve app retention and engagement.

Photo by Alexandru Acea on Unsplash


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