Enhance your retention rates, but do not do it for the 85/15 split
to more apps in 2016– and lured designers with an 85/15 split on earnings from clients that stay subscribed for more than a year– membership monetization and retention has felt like the Holy Grail for app developers. A lot so that Google quickly did the same in what seemed an example of healthy competitors for developers in the mobile OS duopoly. How does that split actually work out for a lot of apps? Turns out, the 85/15 split– which Apple is eager to point out anytime developers grumble about the App Shop rev share– does not have a significant effect for many developers. Due to the fact that churn. No matter how excellent an app is, customers are going to churn. Often it’s due to the fact that of a credit card ending or some other billing
concern. And sometimes it’s more of a time out, and the user comes back after a couple of months. However the majority of churn originates from subscribers who, for whatever reason, decide that the app just isn’t worth paying for anymore. If a customer churns prior to the one-year mark, the designer
never ever sees that 85%split. And even if the user resubscribes, Apple and Google reset the clock if a membership has actually lapsed for more than 60 days. Rather hassle-free … for Apple and Google. Top mobile apps like Netflix and Spotify report churn rates in the low single digits, but they are the outliers. According to our data, the mean churn rate for membership apps is around 13%for regular monthly memberships and around 50% for yearly. Regular monthly membership churn is normally a bit greater in the very first couple of months, then it lessens. An average churn of 13%leaves just 20 %of customers crossing that magical 85/15 limit.
In practice, what this implies is that, for all the hype around the 85/15 split, really few designers are visiting a meaningful increase in income: Image Credits: RevenueCat(opens in a brand-new window)Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.