Mobile app loyalty strategy
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Mobile app loyalty strategy

More users in Asia are preferring subscriptions to one-off purchases, says Liftoff

Asian nations have the highest Day 1 retention rates for apps. Somchai Poomlard
Asian nations have the highest Day 1 retention rates for apps. Somchai Poomlard

Asia is home to some of the highest performing countries in terms of Day 1 mobile app user retention, although loyalty towards apps in general tends to drop off after 30 days, according to the annual Mobile App Trends Report, which provides insights into the booming app economy.

The report by Liftoff analysed some 349 billion impressions across 992 mobile apps, 5.35 billion clicks and 76.6 million total post-install events. It covers a variety of app categories, including those in finance, entertainment, lifestyle, music and audio, education, gaming, shopping, social media and more.

The researchers looked at 30 countries in four regions, including 11 in Asia-Pacific (Bangladesh, China, India, Indonesia, Japan, Pakistan, the Philippines, South Korea, Taiwan, Thailand and Vietnam). The report found the following:

First impressions count: Asian countries show the highest Day 1 retention rates among all countries. The retention rate measures the percentage of consumers that continue to use an app over a given period of time. The average Day 1 retention rate in Asia was 25.2%, with Taiwan (29.5%) outperforming, followed by Malaysia (29.1%), Japan (28.4%) and Thailand (27.0%).

Despite the high figures for first-day retention, users drop off considerably after a month. The Day 3 retention rate was only at 12.6% in Asia -- the lowest across all regions -- while the Day 7 rate dropped to 8.1%, compared with 8.9% in North America, 8.5% in Europe, the Middle East and Africa (EMEA), and 7.9% in Latin America. By Day 30, the Asian retention rate stood at 3.1%, against 3.5% in EMEA and North America and 2.8% in Latin America.

A key factor explaining the high early retention rates in Asia is the relatively low cost-to-engagement ratio for users to install an app, at US$1.11 for 100% engagement. The drop-off by Day 30 could be explained by the low conversion of cost to engagement for in-app purchases ($85.95 for 1.3% engagement) and purchases ($67.68 for 1.6% engagement). Among all the regions surveyed, the costs were the second highest in their categories, yet engagement rates were the lowest.

Despite this, there seems to be more value derived from app subscriptions in Asia. For instance, the cost to acquire users in Asia was $28.95, whereas the engagement rate was 3.8%. While the engagement rate was the third highest among all regions, the cost was the lowest.

Gen Z(ero ownership): Consumers are far more willing to subscribe to services than to make a purchase. The trend seen in app subscriptions in Asia reflects an overarching trend seen across all regions. Liftoff has observed a cultural shift in consumer purchase behaviour, as subscription rates jumped more than 1.5 times year-on-year.

The subscription economy has taken off in recent years, as consumers have moved increasingly away from ownership, and the market has noticed. Today, there are over 2,000 consumer-focused subscription businesses capitalising on customers' diverse tastes. This trend is also set to take off in Asia, where a Citibank study showed consumers have moved increasingly towards subscription-based models to access products and services rather than a one-time purchase.

For the past two years, Liftoff's data pointed to the growth of the subscription model, but this year it shows one key difference: mobile users are far more willing to subscribe to a service than to make a one-time purchase.

"The subscription model, particularly in e-commerce, offers consumers a convenient, personalised, and often lower-cost way to buy what they want and need," said Mark Ellis, the chief executive and co-founder of Liftoff. "In Asia, we are seeing more regional companies attempting to emulate the subscription-based models seen in the West and trying to replicate them in the region.

"Marketers looking to capitalise on this cultural shift should explore subscription-based models or tiers, or take note of key points in the year when purchase behaviour is up to get the most bang for their buck."

To download the full report, visit https://bit.ly/2NJWjyL

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