Maximizing ROI through predicting user churn

Maximizing ROI through predicting user churn

Retaining users can be a more cost-effective growth tactic than acquiring customers, yet predicting and preventing user churn is sometimes overlooked. In a recent webinar with Adjust and Adikteev, Adrienne Rice, Media Director at M&C Saatchi Performance, joined the panel to discuss ‘How to Maximize ROI with churn prevention & retargeting strategies.’ 

You can watch the whole discussion on demand here; below is a summary of some of the critical points the panel discussed.

Why is user retention necessary in the current mobile landscape?

There has been so much disruption in mobile over the last few years that marketers have to stay updated with changes constantly. Back in 2021, the industry felt the impact of Apple introducing App Tracking Transparency (ATT). Now, the upcoming Google Privacy Sandbox means it will become even harder to engage new users and meet acquisition goals. Therefore, focusing on users already in the system and growing their Lifetime Value can be a valuable tactic to meet growth goals.

As the panel pointed out, for a brand to grow its app successfully, both acquisition and retention tactics must be in place to expand the user base. Taking into consideration that retention can be more cost-effective than acquisition tactics, other benefits include;

  • You know the history of the user, what they want, what they are interested in.
  • You can segment according to KPIs and value metrics.
  • You can, therefore, decide if you want to re-engage them.

What proactive steps can be taken to prevent churn?

“Start by measuring and then predicting churn. Many companies use inactivity as a proxy for churn; for example, ‘if user x has not returned in x timeframe, they are likely not to return at all.’ This is useful, but adding more data points and a prediction model with more data segmentation can be more accurate and detailed.”

Clement Favier Chief Operations Officer, Adikteev

Once churn can be predicted accurately, brands can use strategies such as tapping into their CRM and running paid media to prevent users from churning before they drop out of the journey or encourage them to return at just the right moment.

How does retargeting contribute to an app growth strategy?

“When used correctly to retarget users, paid media can be a game changer, and multiple retargeting strategies can be utilized. For example, users’ download of an app is a key point in the journey when they have the highest intent. Depending on the KPI or goal, a business can encourage the user to take the next desired action at precisely the right point. For example, if you want them to activate a free trial, paid media can prompt them while the need is top of mind.”

Adrienne Rice, Performance Media Director, M&C Saatchi Performance

Adrienne continues, “A second tactic could be to target lapsed users, for example, those who have previously downloaded and used the app but have not had a ‘session’ in some time. In this instance, paid media can help remind them to return to the app and reengage. Encouraging users to fulfill a specific set of steps, be they set up an account, activate a trial a subscription, etc. are all goals paid media can encourage them to do.”

To ensure these strategies work, it is crucial that the advertiser fully understands the customer journey, removes all potential friction points, and ensures that CTAs are clear and straightforward so that people do not drop off before taking the desired action.

Calibrating the creatives and channels for paid media are also essential for success, and depending on the audience, the message may need to be different. For example, you want to get lapsed users excited again so they come back to the app. In this instance, CTV could be a good channel for getting people excited about the app again, as it can tell a story. However, when someone has lapsed mid-journey, they could require more direct instructions to help them complete the steps.

Where should brands start when launching a retargeting campaign?

Marketers should have a thorough understanding of baseline user trends. For example, what is the time lag from install to conversion, where in the journey do people drop off, etc? This will be different for every app, and it is essential to establish BAU metrics so that retargeting can be set up strategically. Without this baseline measurement, understanding the campaign’s impact to see the value the retargeting campaign brings will be impossible.

Adikteev recommended having a retargeting framework established, such as;

WhyHave clear, measurable objectives, goals, KPIs in place
WhoWhat are the audiences and segments you are targeting
HowWhat is the technical setup, eg, will deep links be utilized
WhatThink through creative messaging for each audience or segment as these will be different at each stage of the journey
WhereWhich channel will you use, and for what purpose

Are there nuances to preventing churn depending on the sector?

Definitely, take gaming as an example; lapsed strategies could work, but the apps should be sticky by nature, at least initially. Then perhaps people get bored after some time, and the product owner should know what the timeframe for this might be or which audiences are likely to get bored sooner than others and have a retargeting strategy in place such as offering them an incentive, maybe an extra ‘life’ or tokens to bring them back to start playing the game again.

Or, in the case of a fitness subscription app, recency targeting may be successful. The use case might be to target a user who has downloaded the app for a free trial but has not yet subscribed. In this case, it is important to act with retargeting at the start of the trial while intent is high. Beyond a few weeks into the trial, intention might decline, and the chance of a user subscribing will fall.

What changes can marketers expect with SKAN 5 and Privacy Sandbox on the horizon?

Google Privacy Sandbox is still very much WIP. Google has said retargeting will be possible, which is good news compared to SKAN. Audiences will be managed by a protected audience API, meaning collaboration with your MMP and SSP will be very important.

On iOS, under SKAN 4.0, the only way to run retargeting campaigns requires double opt-in. This means the ATT prompt is shown both in the app where users’ consumers consent to allow tracking and again in the inventory app. This does reduce the audience group, but it is worth doing as it provides a sample segment. With SKAN 5.0, retargeting will be available; though the details have yet to be released, we are eagerly awaiting more information.

Why is Incrementality testing important when using re-engagement?

Incrementality tests are essential because you may overvalue a retargeting campaign. Some users will automatically complete the journey and take the desired action without being prompted. Others will need to be nudged along to complete the next action. Incrementality shows what this gap is, and ideally, ‘always on’ incrementality testing is preferred as this enables advertisers to have a clear idea of the actual value of the campaign.

In Summary

While considerable focus is placed on acquisition strategies to grow apps, the ability to predict and prevent user churn is also essential. Strategies can become highly sophisticated to recognize and prevent users from lapsing, depending on numerous factors such as the audience segment, their lifetime value, their interests, and the app’s stickiness to start with.

Do you have any questions or want to hear how we can help your brand grow?

Further Reading

How to boost user engagement leveraging paid ads for app re-engagement

Kate Lovejoy from Adikteev on preventing user churn