Perspectives

The Problem With Over-Investing in Acquisition, and Under-Investing in Retention

The value of investing in retention marketing, and spending the time to think carefully about what different segments of your users will respond to, is clear.

Kat Sherbo

Senior Content Manager, Braze

Last month, Amplitude CEO Spenser Skates told us why Companies Overspend on Marketing, Underspend on Product, and explained why that’s a dangerous situation. Let’s add a bit to the story. Marketing spends, of course, can cover different kinds of initiatives. And retention marketing (as compared to acquisition marketing), is a huge part of the growth equation, right alongside product development.

The average cost to a brand for every app install has reached $2.51 on Android and $1.78 on iOS. But 70% of those new users may be lost just one day after install, and retention rates drop to 4% by the third month. That high churn rate means that the cost of acquiring users that are still engaged with your app three months after install is 25 times higher than just acquiring new users.

RELATIONSHIP MARKETING

Keeping users around is the key to sustained growth. When brands think about “UX,” user interface and app development come to mind. But a user’s experience with your brand is actually the sum of user interface experience and marketing campaign experience. For example, when you’re using your favorite ride-hailing app, do you separately judge the value of the app’s function in hailing a car for you from the notification it sends telling you how far away your driver is? It’s all part of the same “experience.”

Thoughtful Retention Marketing Increases Conversion Rates 3x

The value of investing in retention marketing, and spending the time to think carefully about what different segments of your users will respond to, is clear. At Appboy, we’ve looked at over two years of data spanning more than 10 billion marketing messages sent to understand retention, engagement, and conversion. Here’s what we’ve found. Sending campaigns to smaller, thoughtfully constructed segments, taking into account personal preferences and each segment’s previous interactions with your brand (as opposed to larger batch-and-blast campaigns), can increase conversion rates threefold.

When the user’s experience is a seamless melding of a great product and useful, relevant, valuable messages, that’s retention marketing done right.

Last Updated: 05/10/18

Published: 04/14/16

Kat Sherbo

Kat Sherbo is a Senior Content Manager at [Braze](https://www.braze.com/). She’s a marketer, writer, and editor with a passion for engaging stories. When not at work in the world of content and mobile apps, she can be found reading fantasy fiction, working her way through watercolor painting books, or watching reality TV.