Acquisition

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Metrics That Matter for Organic App Growth in 2020: Vanity vs. Actionable

Introduction

Undoubtedly, one of the worst outcomes of the pandemic has been the looming economic recession that has slowed down businesses and forced marketers to ask some inevitable questions:

A. What does growth actually mean in the new normal?

B. How should marketing and product leaders react to rapidly changing consumer behaviors?

C. How can they achieve true organic growth despite the shrinking marketing budgets?

D. How can they identify the right metrics and align them with their organization?

E. Finally, should marketers contemplate going back to the fundamentals of marketing and measure real metrics as opposed to vanity metrics?

In this blog, we will cover all these areas and look at the biggest differentiators that can set your app for organic growth and drive informed decision-making.

Why is marketing important?

“If you build, they will come”–this is the mindset that has driven developers but is untrue. Why? Because if you want to stand out in the App store, you must get every reasonable advantage possible and capitalize on it. This is where marketing comes into play.

Marketing allows you to find the ‘whales’ aka valuable users for your product who will not only enjoy using it but will also be willing to pay for it. To get these users to the door, you need to look at the whole product process as each step has its own North Star (NSM) metrics and goals to achieve.

Stage 1: Idea Validation

You need to validate the idea, which includes tracking internal metrics (think: trial activations, retentions, etc.) and engaging in soft launch testing. The users that you acquire for your beta/soft launch testing can offer essential insights and help you to validate the idea of the product as well as build the right customer journey map.

Stage 2: User Acquisition

Post the pilot testing, you will need to make the product come alive and acquire more users.

Stage 3 and 4: Consideration and Purchase

As the users are trying to decide where or not to use your product, it is critical to identify the right price, the right place, and the right moment to showcase the purchase window to your most loyal and valuable users.

Stage 5: Loyalty and Feedback

In the final stage, you’ll need to circle back to the product development stage by gathering feedback on product performance. The idea is to make improvements to succeed and satisfy your users.

The learning? Each part of the journey is important and marketing is not a standalone process. You need to emphasize and evaluate all these factors and internal metrics that
you have collected during the product development. In other words, there’s a strong correlation between your external (marketing) and internal (product) metrics.
 
So the main question from a marketing perspective then becomes: “How to acquire the right users which will pay and use your product?”
 
Keep reading.

The Art of Organic User Acquisition W.R.T Product Monetization

First things first, you need to understand that more users equals more revenue. So you need to understand the product type before you start marketing to these users. Typically, when it comes to products, you’ll notice that there are two types of the products: free apps with an ad monetization model and paid applications with a subscription or in-app purchasing model. This demarcation is important as you need to highlight different metrics while acquiring the users.

For example, for free apps, you should be track the following North Star metrics:

  • Number of installs/users
  • Daily/Monthly Active Users (DAU/MAU)

You can also optionally track other metrics such as:

  • ARPU/ARPPU
  • LTV
  • ROI

On the other hand, for paid apps, the situation reverses. You should be tracking the following North Star metrics:

  • ARPU/ARPPU
  • LTV
  • ROI

Optionally, you can track the following as well:

  • Number of installs
  • DAU/MAU

The learning? As you can see, the marketing strategy and by extension, North Star metrics for each product monetization type is different. So you need to identify the right marketing strategy. In the case of free apps, the cost of user acquisition is much less and it does not matter what the user is doing inside your application after they have downloaded it. Conversely, for paid apps, tracking the quality of users is important as you want users to keep paying for the app in the future. You also need to remember that this is actionable for both paid and organic traffic channels.

In marketing terms, organic user acquisition refers to app store optimization (ASO), which includes graphic assets optimization and keyword optimization.

Here’s an example of an organic user flow for the App store and Google Play store (which is more or less the same):

However, the big difference between the App store and Google Play store is that the latter does not take into account impressions (whether the application is on the screen for more than one second or not) as an important metric. 

Pro tip: Both App store and Google Play track Installs as clicking/tapping the install button inside the stores but they do not measure the first session as an install. So it’s very important to compare those analytics that you have inside the consoles with your MMP platform because there, you will find the real figures and real installs that your app has from the specific store–a fact that most marketers might be ignoring. 

Organic User Acquisition: Different Metrics to Factor In

1. Organic Search:

Organic traffic divides into two groups where users typically come in from either keyword optimization or search. It comprises of the following North Star metrics –
A. Keyword movements (the ranks dynamic), which is a vanity metric. In this case, it is important to analyze the keywords being used for relevancy and popularity.
 
B. Search visibility dynamic, which is an actionable metric. This can be done by looking at the ‘Search Visibility’ score, which is calculated by taking into account all keywords that are ranked for your application and dividing them into huge formula with key metrics such as the popularity of the keywords, current ranks and positions by each keyword, etc. The higher the rank you have by the most popular keywords, the more search visibility score you will get. 

2. Ratings and Reviews:

Next, you need to engage in reputation management to ensure good ratings and reviews for your app. Typically, there are two types of ratings to consider:
 
A. Average Rating, which is an actionable rating in terms of CR and app store algorithms. It refers to the marketing and product ratings that the users can see in the stores and signifies the satisfaction score of users using your product. To enable this, you need to choose a great moment for the store rating prompt.
 
B. Average Rating by Review, which is an actionable rating in terms of real feedback with respect to customer support and product. It refers to your user’s pain-points. You can review the user’s textual feedback and resolve bugs/issues in addition to getting real insights into your products.
 
The learning? When it comes to organic acquisition, always:
  • track the correct conversion rate
  • use the correct install statistic
  • research the search visibility changes, and not the keyword movements
  • track both average rating and average rating by reviews

North Star Metrics Beyond Acquisition, Across the Customer Life Cycle

Growth doesn’t stop at acquisition; it happens when your customer comes back and purchases from you regularly or when they subscribe for a longer period of time. So you need to have the right set of metrics that can impact the customer life cycle–from acquisition and onboarding to engagement and long-term retention.
 
So the real question then becomes: “How can customers define these North Star metrics?”
 
Here’s a useful flow to consider:
 
Step 1: Identify the right North Star metric by zeroing down on:
 
– The products/services that your customers love
– Channels that show potential for growth
– Spend optimization for higher ROI
 
Let’s take an e-commerce example. So say, you have one metric which is weekly active users and the other metric, which is monthly orders delivered. Now there are three characteristics of a good growth/North Star metric:
 
One, it should align to the customer value and the journey. On other words, the key metric must be derived from a true understanding of what action provides realized value to the customer. To do this, you need to measure metrics like daily active users, registered users, etc. and metrics that throw light on how your customers are actually valuing your product.
 
Two, it should impact revenue. This could be a profitability impact in relation to your organization goal. You need to define the leading indicators which have a correlation between your monthly revenue or the average revenue per user because this will tell you how your revenue and your average revenue per user will increase later. So you need to go further upstream from revenue and the organization-wide metrics.
 
Three, understand whether it represents your product strategy or not and what it is that you want to achieve with your product. You can have two to three metrics and then break those further down into sub-metrics to make it more manageable.
 
Step 2: Break down your NSM into Tier 1 and Tier 2 metrics:
Start by breaking down your NSM that drive accountability and ownership at the team-level. You can then translate these into Tier 1 and Tier 2 matrix across different teams.
 
This can become challenging in one two ways:
 
One, due to the absence of the right culture in place. Your organization’s culture should be driven down from the top CEO level and move downwards because without the cross-silo relationships and a willingness to prioritize the company goals above the team goals, you’ll find yourself in troubled waters. This is especially true in more traditional mature organizations which are being disrupted by changes in the digital consumer behavior.
 
Two, when there is a lack of the right set of tools. You need the right tools to understand:
  • the customer’s likes, dislikes, behavior preferences etc. across the entire customer journey
  • the journey parts of your customer segments
  • the stages in the user journey and how customers are using the product features
  • the functionalities users are using within the app and why are they using it
All these can collectively uncover the relationship between customer actions and the NSM.
 
Let us look at an example of an e-commerce company, which considers the weekly purchases and weekly buyers as a NSM. Let’s assume that the company defines this by way of understanding how many customers are buying products from the app/website every week.
 
The next step is to identify the Tier 1 input metrics at each stage of the customer journey that can influence the overall NSM. For example, to improve your weekly purchases metric, you need to make sure that you are acquiring the right set of customers. To break down this NSM into Tier 1 input metrics, you’ll need to map the customer journey as well as the different departments that are mainly responsible for that stage of the customer journey:

For example, at the acquisition and onboarding stage of the customer journey, one of the input metrics you can measure is the percentage of new users who complete a transaction within seven days of the app installed. If you improve this percentage, then you’ll have higher number of weekly purchases. 
 
Similarly, at the engagement and retention stage of the customer journey, one of the input metrics can be users who are actively engaged on the app in the last 30 days but have not made any purchases yet. Customers who are more engaged are more likely to respond to your promotions/communications so if you increase the number of users who are recently engaged with your app, you will have an impact on your weekly purchases.
 
Finally, you can also look at the average revenue per user. If you already have customers who are buying from you once a month, you may want to increase their purchase frequency to once a week. In other words, if you increase your revenue per customer within a 30-day window, you will most likely impact your NSM and weekly purchases.
 
Moving onto defining the Tier 2 matrix. The idea is to improve your Tier 2 metrics in such a way that it impacts your Tier 1 metrics as well right:
For example, if you acquire the right set of users every week, you can potentially increase the users who will actually buy something from your app between day 0 to day 7 by:
  • Increasing the time that the users are actually spending on your app–it could be session count/session length
  • Driving engagement and measuring the DAU by MAU ratio
  • Decreasing the churn rate
  • Reducing the cart abandonment rate

The learning? Even though this looks simple, the framework can get complicated in a large organization or a fast-growing organization because:

One, when you cut this across multiple products, geographies, and departments, this can become complicated.

Two, in a fast-growing organization, this metric will mostly likely change every six months.

 
So how can you tackle this? With the right set of tools and data at hand. You also need to ensure that the entire organization is in perfect alignment. 

The Bottom Line

Here’s the long and short of it: Identifying the right metrics can empower marketers to drive results-oriented decisions. While metrics like the number of app downloads, social media following, subscribers, and page views look impressive, you’ll know they often fail to reflect the actual health of your app. Therefore, it is important to identify the right North Star Metric and drive ownership among various teams for an effective growth strategy. Take cue from the strategies outlined above and drive organic growth across the customer journey.