April 24, 2024

Activation Rates for Mobile Apps by Industry

Find out activation rates for mobile apps by industry, and go through strategies to improve activation rates over time.

In this blog, we will explore what activation is, why it's important, average activation rates for mobile apps by industry and even strategies for increasing activation rates. Let’s dive in!

What is activation rate?

Activation rate is the percentage of new users who successfully build a habit around your core value driving actions.

Users need to complete specific milestones in your onboarding process which correlates highly to long-term retention. These milestones can be any actions that raises the likelihood that the user will return and continue to use the product.

This milestone will vary from one mobile app to the next, based on what core actions give value to the user. A social platform may keep track of the proportion of users that add their first friend. A music streaming app may consider how many users construct their first playlist, and so on.

The graphic below shows an example of key milestones events on apps from different industries.

Key actions leading to activation

Why is activation rate important?

Activation occurs when users first build a habit around the core actions that deliver the value you promised. The activation rate aids in determining the efficacy of your onboarding initiatives. If your activation rate is poor, it could mean that your onboarding process is cumbersome or unclear, and customers are abandoning their accounts before reaching crucial milestones. Assume you have a 25% activation rate. That indicates that roughly 3/4 of customers who sign up for your product will abandon it somewhere throughout the onboarding process, presenting a substantial opportunity for improvement.

A low activation rate on a consistent basis may also indicate that your marketing and sales activities are attracting low-quality prospects. Having a large number of initial sign-ups is less useful if many of them abandon the product before finishing onboarding. If this is the case, consider changing your sales and marketing messaging to reflect this.

How to calculate activation rate?

Determining your activation rate is simple if you know what milestone you're tracking. Divide the total number of people who signed up for your product by the number of users who completed that activity

Product analytics tools like Mixpanel, Amplitude and PostHog offer easy ways to monitor how many people are completing your set milestone.

4 metrics to track alongside activation rate

Although activation rate provides insightful data about your consumers' early interactions with your product, it is not a complete picture. It makes no mention of how many people return to the product after activating it, or whether they eventually make a purchase. To gain a clearer view of the value consumers receive from your product, keep an eye on the following metrics in addition to activation rate:

  • Customer churn rate: Calculates the proportion of customers dropped over a specific time span. The churn rate examines consumers who leave after being accepted.
  • Daily active users (DAU): This metric determines how many users engage with your application every day. Without concentrating on a single, particular sort of contact, this enables you to see how many of your customers use the product frequently.
  • Daily active users (DAU) to monthly active users (MAU) ratio: Reveals the number of your monthly active customers who engage with your application over the course of one day. This number provides background for DAU and aids in determining how sticky a product is.
  • Sign up to subscriber conversion rate: The proportion of users who sign up for a free trial of your product before becoming paid subscribers. This aids in determining how useful free trial users find your product and their propensity to convert after the trial period has ended.

Pre-conditions for successful activation

To activate a user, you need to deliver multiple aha moments. But to deliver these aha moments, you need to satisfy some necessary pre-conditions.

Let's take an example of a dating app. An illustration of an "aha moment" would be setting up a meeting within two days of registering. Another example would be a high-quality and thrilling conversation with another user after registering during the day. Such goal events will provide users with a sense of success in solving the issue.

The necessary pre-conditions for having an "aha moment":

  • The individual must first submit a picture and create a profile. The chances of getting a response without a photo or a complete profile are almost nil.
  • Second, the user must locate and like a number of other accounts. To accomplish this, the application must include other users from the user's location.
  • Finally, the individual must obtain at least one like in return. This is needed in order to initiate a chat.

If you successfully deliver aha moments repeatedly, then you will lead the user to getting activated.

Impact of poor activation rate on Monthly Recurring Revenue(MRR)

A bad activation rate can be detrimental to a mobile app company in several ways, potentially leading to the failure of the company:

  • Low user retention: If users are not activating the app and finding value in it, they are more likely to abandon it and not return, leading to low user retention rates.
  • Reduced LTV per user: If users are not activating the app and completing desired actions, such as making a purchase, the app company will not generate revenue. A low activation rate can lead to reduced revenue and profitability.
  • Negative reviews: Users who are not able to activate the app and complete desired actions may leave negative reviews, which can discourage other potential users from downloading the app.
  • High user acquisition costs: Acquiring new users can be expensive, and if the company is not able to convert these users into active users, it will result in high user acquisition costs with little return on investment.

The graph below shows how an unoptimised activation rate strategy can impact your business’s monthly recurring revenue over the course of 24 months.

Activation rate impact on MRR

Activation rates for mobile apps by industry

Based on survey results, broadly, the average activation rate is 34% and the median activation rate is 25%.

Here’s what average activation rate looks like industry wise:

Activation rates by industry for mobile apps
Activation rates for mobile apps by industry

How to increase user activation for mobile apps

Now that you know activation rates and how to calculate them, let’s look at the strategies you can use to improve activation.

Provide friction-free self-service sign up

The goal of frictionless sign-up is to make things simpler for users and collect only relevant data to better serve genuine users.

Most product and growth managers reduce only interaction friction however, by:

  1. Limiting number of steps to complete the flow, the number of form fields, etc
  2. Limiting the number of additional activities a user must do to sign up, such as JavaScript installation, email verification, CAPTCHA, etc.
  3. Improving motivation with SSO Single Sign-on (SSO) for an easy sign-up process.

You also however need to reduce cognitive friction associated with signup. This refers to the mental burden a user might face, such as not knowing what details to enter, having to think about questions that are being asked, etc.

Correct use of in-app messaging

In-app messaging can help increase activation and also improves retention rates by providing users with relevant and timely information, encouraging them to engage with the app and continue using it.

Guided walkthroughs: In-app messaging can be used to guide new users through the app's features and functionalities. By providing helpful tips and information, you can help users understand how to use the app and get the most out of it. This can help increase activation rates by reducing the learning curve and making it easier for users to get started.

Guided walkthroughs for onboarding

Reducing time-to-value: Make their journey simpler by highlighting the right features with simple tooltips or other forms of in-app messages. Let’s take another example of Google Pay, they know that a new user will be activated much faster if they make a payment to their contacts via a search, or by scanning a QR code. They make sure a new user is aware how to use those 2 features with tooltips.

Google pay tooltips to guide new users to onboard quickly
Quick activation using tooltips in Google pay

Motivate your users to complete activation

Add the right social proof: Social proofing is the idea that people are more likely to do something if they see other people doing it. In the context of an app, social proofing can be used to increase user motivation by demonstrating that other people are using and enjoying the app. Here are a few ways in which social proofing can increase user motivation for an app:

Edtech companies adding social proof to motivate users to finish onboarding
Edtech companies adding social proof to motivate users to finish onboarding

Use progress bars: An effective way to show users how far they have progressed in the activation journey. By displaying a visual representation of their progress, users can see that they are making progress towards their goal and are more likely to stay motivated. Progress bars can be used to show progress in the activation journey, such as completing a profile or filling out a form, and can be customized to match the app's design and branding.

Duolingo uses progress bars

How Plotline can help you improve activation rates

The key to long-term growth is building up a solid customer base full of long-term users. To do so, you have to think about user retention and feature adoption at every stage of the customer lifecycle. Long-term success comes from continuing to engage users throughout their entire customer journey and inspiring more "aha” moments.

Plotline is an in-app engagement tool that helps businesses improve their mobile app's activation rates by providing a personalized user experience, guiding users through onboarding, communicating with users through in-app messaging, conducting A/B tests, and collecting user feedback.

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