User churn is one of the most critical metrics for any digital business. Analyzing and predicting churn can give your business a sense of how users are engaging with or consuming content, or spending time with your app or mobile game — and when and why they might decide to stop.
By definition, user churn is the percentage of daily active users or monthly active users who stop visiting your website, blog, mobile app, or mobile game during a specific time frame.
Churn is essential to monitor. According to various studies, it’s 5 to 25 times more expensive to gain a new customer than to keep an existing one.
How to Calculate User Churn
The first step in fixing user churn is to measure it. There are three core calculations related to churn. All of them will help you understand important aspects of changing user habits.
- The number of users who have stopped visiting your site, or who stopped using or uninstalled your app or mobile game. For a specific time period, your churn rate can be calculated by dividing the number of users you lost by the number of users you had at the beginning of that period.
- The percentage of users who dropped below a certain threshold that — for you — defines an active user. For this calculation, calculate the proportion of users who are below that threshold compared to your total user base.
- The dollar value of the recurring revenue lost divided by the total dollar value of recurring revenue at the start of a specific time period.
With these calculations in hand, you can start to measure and track the impact of losing these users. Then you’ll have a better sense of the effects of churn on your business. That gives you the chance to plan mitigation remedies.
How to Reduce User Churn
Reducing user churn for your app or mobile game starts with these three practical steps:
Predict: Using AI analytics software, you can now predict user churn. Pecan AI can identify patterns preceding churn that are too complex to be discoverable by the human eye. Pecan’s predictive models then apply those patterns to your user data to calculate each user’s likelihood to churn. The platform also reveals the key factors affecting the churn risk for each user. With Pecan AI, you’ll see who’s likely to churn and the reason why.
Prevent: Equipped with churn predictions, you can not only prioritize higher-value users likely to churn for your retention efforts, but also know the reason why. This hyper-granular detail will help shape your communication strategy and create relevant offers personalized to each user’s most influential reason for potentially churning.
Mitigate: Once you understand who and what is driving churn, you can take the right mitigation actions. That might be improving onboarding, providing upgraded customer support, increasing engagement, or other strategies. You’ll have a whole new level of information to guide your choices.
While simple calculations of user churn are helpful, they’re just a preliminary step in addressing churn. When you’re ready to contend with the challenge, predictive analytics offers an effective and future-driven approach that’s far superior to just examining past data.
For more information on user churn, check out these helpful articles and whitepaper. If you are interested in how Pecan AI can help you lower your user churn, please reach out to our sales team today and schedule a demo.
