How to Measure MVP Success for Mobile App Start-ups
October 27, 2016
Apple reported that more than 100 billion apps have been downloaded from the App Store as of June 2016. Incredible stats!
Mobile is the way forward for all kinds of businesses. To achieve success, the main aim should always be to introduce actionable user responses into the development process as early as possible; MVP (Minimum Viable Product) is the right step. However, in addition to that you need to measure the right metrics, optimize and iterate your applications as per your target audiences.
Measuring MVP success
The nature of your application decides the metrics to be used to calculate its MVP success. For example,
- Preferential User ratings and store placement : User ratings are excellent source of feedback.
- App Download & Launch rate : Download and launch rates depict users’ preferences on trying out your offering. The lighter your app is, higher the number of downloads.
- Customer Acquisition Cost (CAC) : What does it cost to get a new paying user? This metrics helps you to learn whether your marketing efforts are up to the mark or require improvement.
CAC = Money spent on traction channel / Number of customers acquired through the channel.
- Active Users’ Percentage : 77% of app users never use an application again, mostly 72 hours after installing it. Hence, download and launch rates are not enough to measure MVP success. You need to study users’ behaviors closely.
- Percentage of Paying Users : Who are the actually paying users? You need to track all the info. How exactly are they using your app? How much time elapsed between the first launch and first purchase?
- Average Revenue per User (ARPU) : It’s wise to know what your average transaction size. Also don’t forget to observe which items bring the most purchases.
ARPU= Total revenue for the time period / Number of active users
- Customer Lifetime Value (CLV) : This shows how much an average time a user spends before he stops using your mobile app.
CLV= (Profit from a user *App usage duration) – Acquisition cost
- Churn: It’s the percentage of people who uninstall your app or stop using it.
Churn = Number of churn per week (month) / Number of users at the beginning of week (month)
Just the ‘Typical’ is never good enough for a startup, so your goal is to always iterate.
Points to Consider:
- If your one time users don’t convert into moderate users over time, your MVP is complicated. It’s time to improve your UI.
- Make sure at least 10% of registered users open your application once a day.
- Review rate for free applications usually is significantly less than 1%.
- Customer acquisition cost should be 1/3rd or less than the total value a user brings you over a lifetime.
- If about 1.5% of users buy something from your app, it’s typical. You should aim for more.
Have an idea? Get a MVP done as fast as possible…
Read my previous article MVP vs POC to get a better idea on a Minimum Viable Product. I’d appreciate if can you drop your comments below.