Loyal Users Generate 25% More In-App Purchases

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In-app purchases are the lifeblood of many apps, and although it may seem like getting users to the sale proposition quickly is ideal, a new Localytics study finds that building relationships with app users and fostering long-term usage are more important. Of all users in Localytics' study who made an in-app purchase, 44% did not do so until they had interacted with the app at least ten times. On average, a user who makes an in-app purchase will do so 12 days after first launching the app.

In research from last year, Localytics found that 26% of apps are used only once after being downloaded. As a result, the app publisher community has made a concerted effort to shift away from incentivized downloads and towards engagement and overall customer lifetime value (CLV).

44% of people who make in-app purchases do so after using an app 10 or more times

With this new data, that shift is shown to be even more important. With a high correlation between highly engaged users and in-app purchases, developers and publishers with a goal of maximizing CLV have even more reason to obsess over user retention. The more your users interact with your app, the more likely you are to get a chunk of the $5.6 billion in in-app purchases expected by 2015.

Engagement leads to higher CLV

Even more, the users who wait and interact with an app multiple times before making their first in-app purchase are more valuable in the long run, making 25% more in-app purchases over their lifetime as a customer. First session purchasers will make an average of 2.8 purchases in a given app during their user lifetime, compared with 3.5 purchases for all other purchasers.

Users who wait to make their first in-app purchase make 25% more lifetime purchases than users who buy on their first session

While moving users towards a purchase as quickly as possible is often considered the primary objective, this data suggests that turning purchasers into loyal, repeat users should be a top priority. While a first-session purchase is an excellent result, our data found that only 16% of users who make a purchase their first app session will go on to engage with that app 10 or more times, compared with 26% of overall app users. Thus, it is imperative that app developers and marketers pay special attention to their analytics solution's loyalty features.

Grow customer lifetime value

By building your app's engagement and your brand's presence in a user's mind, you can generate better overall revenue based on a loyal base of repeat users. Given the 12 day average time between downloading an app and making a purchase, driving loyalty across a period of weeks will often generate greater revenue.

At Localytics, we help app developers and marketers build more successful and profitable apps with the highest possible CLV through retention analysis and using funnel analysis to optimize in-app purchases. To enable these analyses, app publishers track each purchase and the steps taken to complete the purchase. For the purposes of this study, Localytics analyzed nearly 30 million users' in-app purchasing to extract patterns publishers can use to benchmark their own apps' performance.