What Is The Mobile App User Acquisition Funnel?
The mobile app user acquisition funnel is how industry professionals visualize the stages of a customer’s relationship with the app. It has five stages:
- Exposure/discovery (in which potential users become aware of the app);
- Consideration/exploration (in which potential users learn about the mobile app design and its value);
- Conversion/activation (in which potential users install, register, subscribe to, or purchase the app);
- Re-activation/relationship building (in which users make in-app purchases, continue using the app past day 1, and engage with in-app ads); and
- Retention/loyalty (in which users become loyal to the app and contribute recommendations and referrals that drive new user acquisition).
The more stages of mobile app user acquisition funnel a customer moves through, the more money app developers make (both directly and indirectly) from the relationship. That said, it also costs progressively more to move a customer farther through the stages of the mobile app user acquisition funnel, so understanding how to improve app profits requires understanding how to balance the costs and revenue gained from customer relationships.
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The Math Behind Successful (Profitable) Mobile App Designs
Growth-hacking the mobile app user acquisition funnel has two goals:
1. Boost mobile app key performance indicators like app downloads, usage frequency and duration, and the retention and lifetime value of app users (this increases revenue).
2. Minimize other mobile app key performance indicators like mobile app user acquisition costs, churn rate, and app loading/crash/error metrics (this lowers the costs deducted from the revenue).
The math behind this process is fairly straightforward. If you can lower the barriers to app installation, registration, and paid user actions while simultaneously increasing users’ loyalty to the app, then you will grow app revenues while decreasing the upfront costs of getting people to use the app.
Step 1: Lower Your Mobile App User Acquisition Costs
Mobile app user acquisition cost includes the marketing spend (and other up-front investments) necessary to make your app visible and attractive to a potential new user. This is in addition to the money needed to mobilize that potential user to install, register, subscribe, purchase, or make a purchase within the app, plus continue to use, recommend, and engage with ads through it. Consequently, mobile app user acquisition cost is a strong mobile app key performance indicator — lower costs indicate a well-targeted marketing strategy, intelligent operational investments, and a valuable/desirable mobile app design.
The average mobile app user acquisition costs vary depending on what, exactly, you want your users to do. Generally speaking*, mobile app user acquisition costs are lower for simpler, less expensive actions. Specifically, free mobile app designs that have no user registration requirement have the lowest mobile app user acquisition costs (averaging just $1.75 per user in up-front investments). Getting users to make in-app purchases has the highest costs per consumer (averaging $86.61 per user).
*There is some variance between Android and iOS users when it comes to mobile app user acquisition costs for paid actions. Android users are more willing to pay for a subscription or purchase an app; iOS users are more willing to make in-app purchases.
Step 2: Increase The Lifetime Value Of App Users
Put simply, the lifetime value of app users is the net profit you can expect to make from/as a result of each person who downloads your app, during the entirety of your relationship with that user. There are three components to the lifetime value of app users, regardless of what kind of app you’ve developed or what kind of device(s) they run it on. Specifically, those components include:
- Monetization (how much a person spends on the app, subscription options, and in-app purchases as well as how much you make from their engagement with ads hosted on your app).
- Retention (how much you save by not having to re-engage the user or acquire a new user to replace them).
- Virality (what you gain, indirectly, as a result of a person’s positive recommendations and referrals to your app).
Understanding how to improve app profits hinges on understanding the importance of increasing these different aspects of the lifetime value of app users. That’s because the most straightforward way to grow mobile app profits is to increase the lifetime value of app users; that way, you can make more money per customer and save money on your mobile app user acquisition costs.
How Mobile App User Experience Impacts Net Profits
Mobile app user experience has a dramatic impact on both mobile app user acquisition costs and the lifetime value of app users. That’s because a high-quality, high-value mobile app design that is easy-to-use and relevant/beneficial to consumers’ daily lives will have fewer barriers to attracting and activating new users and more innate reasons for users to continue to use and recommend it to others.