Loyalty isn’t over, it’s now on demand
Breaking the myths around customer loyalty on mobile apps
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Does customer loyalty still exist? Common wisdom is that people no longer purchase the same product or service from only one brand in today’s always-on world of instant access and countless choices. But is that true? We sought to sort out myth from reality in the new, low-friction world of apps.
Facebook IQ examined user behaviors across 13 on-demand1 and e-commerce apps, and the findings break a few myths around customer loyalty. The research used Facebook SDK to analyze data from app installs and measure post-install activity from January to December 2017 across Australia, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Understanding how people use an app once it is installed, how often they use it and how much time they spend on it once engaged, helped us unearth insights about the value of a customer through the lifetime of each app.
Myth #1: People make purchases in the apps they install.
App installs don’t automatically lead to paying customers. Across Asia Pacific, only 1 in 6 app installs resulted in user purchases2 within the first month. Of the markets surveyed, Australia has the highest number, with 26% of app installs leading to in-app purchases within 4 weeks after install, followed by Malaysia and Singapore at 19% and 18%, respectively.3
Most app installs don’t turn into paying users within a month of usage4
Percentage of app installs leading to in-app purchases from install to first paid usage (in days)
It's worth noting that if people are going to use the app, they may do so on the same day or within the first week of installing it, with most of the paying users making an in-app purchase within 7 days after downloading the app.3
Despite most paid usage occurring quickly, there’s still a significant number of people who take their time. For instance, in Singapore, 25% of all the users who made an in-app purchase within the first month after install took more than one week to do so.3 This is surprising given that all these apps are marketed to serve immediate needs, such as grabbing a cab, getting groceries or having dinner delivered.
Marketers shouldn't assume that just because people have downloaded and installed an app that they will use it and make purchase in it. And even when they do, it is not always immediate.
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The reality is that app installs are not the landmark of success.
– James Foreman
Facebook Marketing Science
Since most people won’t make an app purchase within the first month, it is critical to find and reach right away the users that will be the most valuable over the lifetime of their app usage.
Looking at installed and used on-demand apps during the months studied, we observed that heavy app users4 were among the most valuable customers, only making up 32% of the app users mix, but representing 68% of usage. And this proportion of heavy users tends to go up over time.5
Most app usage come from heavy app users6
On-demand app users profile and their app usage, from apps installed for at least one month
It is imperative for marketers to go beyond just driving installs. In the long term, it is crucial to allocate advertising spend to reach the right, most valuable people and engage them continually.
Myth #2: People use many apps to do one thing.
Marketers might think people are app-opportunists — they install and use multiple apps to do the same thing. The assumption is they fulfill the same immediate needs via competitive apps by leveraging promos, offers, product or service availability whenever possible. Our study shows this isn’t true.
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The reality is that most people install, then use only one app at a time, most of the time.
– James Foreman
Facebook Marketing Science
People have a strong relationship with apps and — by extension — brands. They express a clear preference for one brand within a category through exclusive usage.
When looking at users who have more than one on-demand app installed, we see little crossover between competing apps. One in 4 people installed multiple apps in each category and of them, only 16% used more than one app in the category on average.7 Most users behave as though a single app fulfills all their needs in that category. In other words, if people aren’t using your app, it is very likely that it's not because they don't want to use your brand, but rather because they don't see much use of the category as a whole.
Most people install and use only one app at a time8
Percentage of app installers who install and use more than one app
Some users remain somewhat opportunistic, with 5% of all people having installed, used and purchased from more than one app. Surprisingly, of all the categories, e-commerce customers are the least inclined to use multiple apps for their purchases, despite intense competition from rivals. Only 8% of e-commerce customers who have installed multiple apps are using two or more apps to make purchases. Most do their shopping from only one.7
So, what we can understand from this is that most people have high fidelity to a single app in a category. And if they start using it, they will keep using that one, and that one only.
Myth #3: People who use an app frequently will keep using it.
Our study shows that nearly 1 in 2 on-demand app users who start using an app routinely at the outset continued to do so two months later.9 Having said that, people don’t always remain heavy users of a particular app, even if they started off as heavy users.
The longer app users lapse, the harder it is to get them back10
Percentage of paying users who return to paid usage after stopping using the app for 1, 2 and 3 months
Indeed, the data reveals a steep attrition of about 12% of heavy users each month dropping off from the app completely, while another 26% of them show a reduced usage of the app. The longer a user has lapsed, the lower the probability he or she will ever come back to the app. In fact, the likelihood the user will start using the app again after three months of stopping is half of what it was after one month off.9
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The reality is that heavy users are fragile, just like light users.
– James Foreman
Facebook Marketing Science
Identifying what turns heavy users off is just as much of a game changer for marketers as identifying what pulls them in. Surprisingly, more than half of on-demand app users who were heavy at three months after install did not make a strong debut, our study found.11
Heavy app users shouldn’t be taken for granted. They can stop being heavy users very fast; most of them didn't start off as heavy; and the longer their usage lapses, the harder it is to bring them back. Just like new or light users, heavy app users need to be continually engaged to remain paying users.
It isn’t easy to earn loyalty, or win it back. But now that we've broken a few myths about it and redefined it, it is a lot clearer for marketers to create the right campaigns that will do so.
What it means for marketers
Find and reach your most valuable users.
Most app usage comes from heavy users. As such, growth opportunities lay not only in increasing user base, but also in boosting usage from existing app users. Know who your heavy users are by measuring how long they leave your app before they come back and re-engage them again within one to two months after their usage dips. Learn how to retarget heavy users with Facebook App Event Optimization and Value-Based Optimization.
Invest in always-on advertising.
Because an install does not always lead to in-app usage and purchase — and when it does, it is not always instant — it is crucial for marketers to improve engagement or re-engage a few days after install. Light users can drop off very easily, and most heavy users did not start heavy, so marketers should run ads targeting people who haven’t used the app in the first few weeks, not just the ones who convert the fastest.
Compete with yourself, not with competitors.
Users have a strong relationship with apps and, by extension, brands. Instead of focusing on stealing users from competitors and forcing exclusivity — which is likely to be happen as normal category app usage behavior — marketers should focus on creating a meaningful value-add for users who have downloaded and installed an app but have yet to make a purchase.
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