{"id":29,"date":"2020-10-05T07:14:47","date_gmt":"2020-10-05T07:14:47","guid":{"rendered":"https:\/\/system.camp\/index.php\/2020\/10\/05\/understanding-kpis-for-mobile-apps-and-how-to-measure-kpis\/"},"modified":"2020-10-06T07:45:51","modified_gmt":"2020-10-06T07:45:51","slug":"understanding-kpis-for-mobile-apps-and-how-to-measure-kpis","status":"publish","type":"post","link":"https:\/\/system.camp\/startups\/understanding-kpis-for-mobile-apps-and-how-to-measure-kpis\/","title":{"rendered":"Understanding Financial Model and KPIs for mobile apps – A definitive Guide"},"content":{"rendered":"\n
KPIs are the ultimate indicator for how well you Mobile app is doing. KPI stands for Key Performance Indicator. The first rule of KPIs is that they need to be the “key indicators” of your business model and should always relate to the financial model directly.<\/p>\n\n\n\n
Why? Because you want to quantify and improve these KPIs to help your company earn more money or get more users.<\/p>\n\n\n\n
The main goal of any app is either to make the sure users are using the app frequently or they are paying frequently. Hence it is hard to make a lot of profits from Utility apps like Calculators. These apps are really good but the overall usage is quite low and hence the Business Model will not make sense to build a company around these use-cases.<\/p>\n\n\n\n
Based on these metrics we can then define how much money the apps can make.<\/p>\n\n\n\n
Let’s define the KPIs first:<\/h2>\n\n\n\n
Retention Rate<\/h3>\n\n\n\n
Retention Rate is the most important metric for a mobile app. This defines the “percentage” of users that are still using the app after a certain time has passed.<\/p>\n\n\n\n
For example: If your app has 1000 user signed up. After one month you check how many users have opened the app in the second month. So in second month if 300 users have opened the app then you retention rate is defined as :<\/p>\n\n\n\n
300\/1000 = 30%<\/p><\/blockquote>\n\n\n\n
So the retention rate is 30%. Industry average is around 15% to 60%. Mobile apps like Facebook, Instagram & watsapp have a retention rate of over 70% hence they have these insane valuations.<\/p>\n\n\n\n
Conversion Rate:<\/h3>\n\n\n\n
This metric is useful for mobile apps that offer a Subscription Model. Conversion rate in this scenario means how many users are converting to paid subscribers.<\/p>\n\n\n\n
For example: From the 300 Monthly Active Users(MAU) if 60 pay and become your subscribers then your conversion rate can be calculated as:<\/p>\n\n\n\n
300\/60 = 20%<\/p><\/blockquote>\n\n\n\n
Hence you have a 20% conversion rate. Industry average is around 10%. The Harvard Business Review found that even a 5% increase in retention could increase revenues by 25% to 95%<\/a>.<\/p>\n\n\n\n