Table of Contents
- The biggest impossible for app marketers
There's a critical shift we need to talk about – moving from just pulling in users to actually keeping them around.
If you're not yet focusing on that bottom of the funnel, it's time to take note: acquisition alone won't sustain your app's growth.
And this isn't just a baseless claim. Consider this:
The likelihood of selling to an existing customer is 60-70%, compared to just 5-20% for a new prospect.
Acquiring a new user is about five times more expensive than keeping an existing one.
80% of paid acquisition users are gone within 3 days
Of course, these numbers “alone” shouldn’t be the reason to be alarmed. Keep in mind that they don't specifically focus on the context of the app business. Also, for a bit of perspective, not all customers, nor apps, are created equal.
But here's a simple fact that's hard to ignore: the global cost of new user acquisition has been on the rise for many years.
Data from Business of Apps shows a steep climb from 2018 to 2022, with 2020 being an exception due to the pandemic's influence. See below:
iOS: approximately 312.10%
Android: approximately 631.75%
These rising numbers are a testament to the trend of apps historically adopting increasingly aggressive acquisition strategies to tackle growth challenges.
But now, it’s time to question the sustainability of this approach and to take a closer look at the often-overlooked goldmine – the existing user base.
Successful apps harness their existing user base for growth, often through a consistent and proactive approach to enhance user experience through the entire funnel.
Consider Duolingo's case (source). The app has seen its daily active users multiply by more than 4.5 times since 2018. The linchpin of Duolingo’s retention strategy beyond its impressive features is its data-driven, proactive user engagement tracking the evolution of different user segments and retention rates over the years.
This data-driven approach enabled them to build forward-looking models and conduct sensitivity analyses to pinpoint which strategies would most effectively boost daily active user growth.
This story can be yours too.
In the upcoming section, we’ll guide you through the strategies employed by successful apps. We’ll delve into the notion of ‘experience-led growth (ELG)’ and introduce Purchasely’s ‘Programmatic funnel engagement’ solution. This solution marks a shift in approach to maximize app growth potential, providing a set of tools to optimize the full-funnel user experience through data-based and proactive user engagement.
What is experience-led growth (ELG)
You might be familiar with product-led growth (PLG) or sales-led growth (SLG) and have possibly driven or transitioned between them.
Experience-led growth, though less known in the app industry, adopts a radically different approach, focusing on two key aspects: existing users and their experiences.
In a world with ever-growing choices and an unpredictable economy, people are increasingly scrutinizing what lies beyond the first impression before making any purchase decision. They are looking for signs of assurance that the product offers more than itself and that the sales narrative extends to something meaningful and consistent.
In response to this trend, an increasing number of brands are reorienting their strategies towards enhancing the customer experience at every stage of the app journey.
When effectively implemented, ELG can offer a pathway to sustainable app growth and enhanced user lifetime value (LTV).
Here’s some proof. McKinsey’s analysis suggests a strong correlation between companies’ CX ratings and their revenue growth. In the United States between 2016 and 2021, companies nailing their customer experience saw their revenue grow more than double those that didn’t have the same focus. Also, these CX-focused companies bounced back faster from the pandemic's hit. See below.
If the concept isn't clear yet, think of it as navigating through a supermarket. While traditional acquisition-led growth focuses on getting customers in the door, ELG takes a broader approach, ensuring customers are consistently engaged and delighted throughout their entire journey, at every aisle from the entrance all the way to the checkout.
The biggest impossibles for app marketers
So, if it’s not a novel concept in the world of business, why aren’t all apps talking about experience-led growth by now? The simple answer is that it’s a whole paradigm shift.
To foster ELG, apps should concentrate on
Insightful engagement: Combine user understanding and interaction, using feedback to adapt and create stronger connections.
Value communication & Consistency: Clearly articulate the app's unique features while maintaining a uniform experience across all platforms.
Data-driven personalization: Employ user data strategically to tailor and enhance the app experience.
Watch Andy Carvel, Co-founder & Partner of Phiture sharing his insights about the role of consistent experience across the user journey.
Concentrating on the above aspects, however, presents its own set of challenges.
1. Mindset shift
Often, there's a concern that users might react negatively to monetization efforts. This leads apps to reduce app and user engagement touchpoints to avoid bothering them. Many users are actually ready to commit; they're just looking for those signs of reassurance, particularly past the point of download, that your app truly meets their needs and expectations.
2. Agile operational culture and resources
ELG demands continuous user experience optimization, not just post-acquisition but throughout the entire journey. This calls for agile experimentation, iterative updates, and cross-functional teamwork.
The challenge? Efficiently managing these processes.
Without streamlining, development and deployment can become time-consuming, potentially stalling an app's growth. Effective management of these processes using the right solution is therefore vital.
3. Deep user insights into the subscription journey
Understanding deeply each user's journey through their subscription is key to implementing ELG effectively. This insight allows for crafting engagement strategies that are specifically tailored to users with different intentions, learning curves, and habits, ultimately improving the overall customer experience.
For instance, the method of interaction with a long-time user who has canceled their subscription should be different from that used with a new user.
To access such valuable insights, it's important to collect and analyze engagement and transactional data. However, despite its evident importance, many apps struggle to develop the data tracking and analysis capabilities necessary to understand each user's unique path.
Programmatic funnel engagement: The key to an effective shift to ELG
Without an effective solution, addressing all of the above challenges can indeed be an impossible task.
With Purchasely’s programmatic funnel engagement solution, the operational hurdles of ELG become a thing of the past.
Benefits of Purchasely's Programmatic funnel engagement solution
At the heart of this solution lie powerful features like A/B Testing, Personalization, Placement, and the Paywall Builder. The integration of built-in and customized attributes, alongside subscription attributes, provides a detailed understanding of your audience, paving the way for highly tailored approaches.
One of the standout benefits is the elimination of manual guesswork in running these engagements. By setting up target attributes and resonating campaigns in advance, you can reach users with compelling messages and offers even before they realize the need themselves. In addition to all of the above, Purchasely's comprehensive analytical features transform data into actionable strategies, ensuring that each of these interactions is a step toward growth.
Now, let's zoom in on some examples that demonstrate how Purchasely turns these possibilities into reality.
How ELG approach works in practice: engagement screens and scenarios
Experience-led growth involves tailoring user engagement based on their specific journey within the app. Here, we'll delve into three scenarios and corresponding engagement tactics to illustrate the power of programmatic funnel engagement.
Scenario 1: Long-term users are approaching the potential for churn.
a) Data-based insight: Subscription type is paid; The user has renewed the subscription for 3 consequent months; Auto-renewal is canceled.
b) Goal: Prevent churn
c) Engagement tactics:
Touchpoint: Target engaging 5 days before the end of the subscription term
Implement progressive discount campaigns to incentivize these users to continue or even upgrade their subscription.
Scenario 2: Active free trial users not converting to a paid plan.
a) Data-based insight: Subscription type is a free trial; The user has opened the app for 3 consecutive days; Auto-renewal is canceled.
b) Goal: Convert free trial users into paying subscribers.
c) Engagement tactics:
- Touchpoint: Target engaging 2 days before the end of free trial
Poor product value: Enhance product discoverability with relevant onboarding.
Poor engagement: Extend the free trial to re-engage users.
Price too high: propose a discount on paid subscription.
Scenario 3: Long-term users renewed subscription for another month
a) Data-based insight: Subscription type is paid; The user has renewed the subscription for 3 consequent months; Auto-renewal is activated
b) Goal: Nurture loyal users by upselling or rewarding
Upselling to loyal users who consistently demonstrate high intent can significantly contribute to long-term retention.
For example, Y+1 retention rates are twice as high for yearly plans (40%) compared to monthly plans. (See below chart)
c) Engagement tactics:
Touchpoint: The first app open after another active subscription renewal
Upsell: After three renewing cycles, offer a yearly plan with a cheaper monthly price.
Limited-time discount: Offer an additional discount on the first year's subscription to incentivize conversions.
🔑 Shift from acquisition to retention: With user acquisition costs skyrocketing, the focus is now on nurturing existing users.
📈 Rise in user acquisition costs: Costs have soared for many years
💡Program retention efforts: Purchasely Programmatic funnel engagement solution minimizes manual guess-work.
🌟 Experience-led growth (ELG): Think of it as ensuring a great experience at every aisle of a supermarket.
🚀 Challenges and solutions: Overcoming mindset shifts and operational hurdles, Purchasely provides data-driven strategies to enhance user retention.
🎯 Real-life scenarios: From reducing churn to increasing conversions, Purchasely tailors engagement strategies for various user situations.