This New Framework Helps Marketers Focus on Retention

Developing a more nuanced view of mobile customer engagement

With customer acquisition costs rising through the roof and retention rates plummeting, it’s clear that the focus on top-funnel metrics has backfired.

Approaches that prize acquisition over retention don’t just burn cash. They blind marketers to the smart ways they could prioritize and personalize communications and campaigns to match every customer’s unique and individual engagement preferences.

To drive customer connection, marketers must first open the aperture of how they view and engage their audience. It starts with understanding who your customers are and then going beyond demographics to investigate and understand the why of what motivates customers to take action.

More importantly, marketers need a framework that will allow them to develop a more nuanced view of customer engagement and take action long before key metrics head south.

Reviving retention rates

Retention rates decline precipitously after a mobile app is installed. A review of retention data from mobile analytics and attribution provider AppsFlyer (included in the 2019 App Trends Report), reveals that roughly a quarter of users continue to interact with apps on day one. That figure drops by nearly half to 13% by day three after the install, marking a critical period when re-engagement efforts could deliver significant business benefits. Delays have dire consequences. By day seven, the data shows, retention rates have hit the single-digits. In other words, marketers have lost nearly two-thirds of their audience.

Engaging with customers faster is a game-changer. But marketers must also have a mix of hard data and soft skills that allow them to infuse every interaction with a personal touch.

Look at recency, frequency and lifetime value

It’s here that a new twist on an old model drives positive results and powers growth.

At its core, RFM (recency, frequency, monetary) is a behavioral segmentation framework that looks at customer activity to determine how recently and frequently someone performed a key action. It also measures the monetary value of the action (such as purchasing an item or subscribing to a service) to help marketers calculate customer lifetime value and make a call on whether campaigns to re-activate a hibernating customer, for example, is money well spent.

RFM doesn’t just help marketers arrive at more manageable customer segments. Insights into how and when customers interact with a brand or engage with campaigns empower marketers to enhance the customer experience when, where and how it counts.

Put a stop to churn

In fact, the real power of this approach kicks in when marketers harness the principles of RFM to avoid churn. In this scenario, the marketer pinpoints the precise customer segment that has interacted or transacted in the past but now shows a drop-off in activity and takes pre-emptive action to reignite the customer relationship before it cools.

Marketers need more than the important foundation RFM provides. This is where the acknowledgment-interest-conversion (AIC) framework comes in. It allows marketers to measure engagement in degrees. Who are your most profitable customers? Who is at risk of churning? Who is most likely to respond to promotions? These are critical questions that demand marketers abandon employing performance metrics that simplify engagement into binary terms (counting customers as engaged or not). Framing engagement with the help of AIC allows marketers to do more than address audiences based on their activity. It also lifts the lid on what will keep customers coming back.

The task of keeping customers active and interested turns up the pressure on marketers to be extremely effective and fiercely personal in how they engage and re-engage customers. Offers, emails, incentives, perks, notifications and nudges—all of these must be orchestrated in real time to strike a personal chord with the customer. The challenge is for marketers to understand that engagement is a continuum that requires them to design user journeys, not just campaigns.


As cofounder and CEO of CleverTap, Sunil Thomas drives the company’s momentum and leads global growth, with the goal of enabling marketers to deliver effective, personalized experiences across devices and platforms. Prior to CleverTap, Sunil held executive leadership positions at CNBC Network 18, Infospace and Zephyr Software.