How to Calculate Retention Rate: Formula, Examples & Growth Strategies

In the world of mobile apps and games, growth isn’t just about downloads — it’s about how many users come back. This is where retention rate becomes one of the most important performance indicators for marketers, product managers, and user acquisition teams.

In this article, we’ll cover:

• What retention rate means and why it matters

• The exact formula and how to use it

• Real-world examples across mobile app categories

• Industry benchmarks for Day 1, Day 7, and Day 30 retention

• Practical ways to increase your retention rate — including reward-based strategies

What Is Retention Rate?

Retention rate measures the percentage of users who return to your app or service after a certain period. It reflects how well your product delivers value and engages users over time.

Retention is often broken down by timeframes — such as:

• Day 1 Retention: How many users come back the next day

• Day 7 Retention: Return rate one week later

• Day 30 Retention: Long-term engagement measure

High retention typically correlates with strong user experience, valuable content, and healthy monetization potential.

Retention Rate Formula

Here’s the standard formula to calculate retention rate:

Retention Rate (%) = [(E - N) / S] × 100

Where:

• E = Total users at the end of the period

• N = New users acquired during the period

• S = Users at the start of the period

Example:

Let’s say:

• You start with 1,000 users

• End the month with 800 users

• Acquired 300 new users during that time

The calculation:

Retention Rate = (800 - 300) / 1000 × 100 = 50%

This means you retained half of your original users, which is generally a strong result in mobile apps.

Types of Retention: How You Measure Matters

Not all retention calculations are equal. Here are a few common types:

Cohort Retention

Tracks retention of users who joined during the same time period (e.g., all users who installed in Week 1 of January). This helps measure the impact of specific campaigns or product changes.

Rolling Retention

Looks at whether users returned at least once after a certain period (e.g., Day 7 or Day 30), regardless of the exact day. Useful for more flexible engagement tracking.

Return Retention

Strictly counts users who came back on the exact day (e.g., Day 7 after install). More conservative and accurate for product lifecycle analysis.

Industry Benchmarks for Mobile App Retention

Retention rates vary significantly by app category, geography, and platform. Here’s a general guideline for mobile games and utility apps:

If your numbers fall below these benchmarks, it’s time to revisit your onboarding, core experience, or incentive mechanics.

Strategies to Improve Retention

Onboarding Optimization

First impressions matter. A frictionless, clear onboarding flow increases the likelihood that users will stick around. Use tooltips, progress indicators, and interactive tutorials to guide users toward their first success moment.

Reward-Based Engagement

Offering value for continued usage — such as playtime-based rewards, progress-based incentives, or daily login bonuses — can dramatically improve stickiness.

One fast-growing approach is using reward platforms that offer users tangible benefits based on time spent in the app. For mobile games in particular, this has been shown to increase Day 7 retention by over 20% in certain genres.

Behavior Analytics

Leverage tools like:

• Airbridge

• Firebase

• Mixpanel

• Adjust

These platforms help you analyze user journeys, identify drop-off points, and test new retention-focused features. Cohort analysis and funnel metrics can be powerful when tied to real-time A/B testing.

Retention as a Performance Metric: Beyond Installs

For many years, marketers focused on installs and cost per acquisition (CPA). But today’s top-performing teams prioritize retention and LTV (Lifetime Value).

Why?
Because installations without retention result in a wasted budget.

With ad costs rising and attention spans dropping, retention-focused UA strategies deliver better long-term ROI. Platforms that optimize campaigns based on real user activity — such as minutes played or repeat sessions — are experiencing more sustainable growth.

The Role of Rewarded Engagement Platforms

Reward-based ad platforms are increasingly helping marketers:

• Attract high-quality users who engage beyond the install

• Align campaign cost with actual user value

• Track performance through playtime or session-based metrics

If you’re scaling a mobile game or engagement-driven app, consider integrating this approach to boost your post-install metrics.

Real-World Example: Improving Retention with Targeted Reward-Based Testing

To understand how rewarded engagement platforms can drive better retention outcomes, let’s look at a real-world campaign executed for a Korean mobile game publisher known for launching successful idle, RPG, and casual games across global markets.

Campaign Objective

Ahead of multiple game launches, the publisher aimed to:

• Identify high-retention users before official release

• Validate gameplay balance through early feedback

• Spark early community buzz and organic sharing

• Collect pre-launch behavioral data to guide marketing strategies

In short, they needed a reliable way to simulate real user behavior and gather actionable insights — before investing heavily in a full-scale launch.

Strategy: Rewarded Closed Beta via Playtime-Based Engagement

To meet these goals, a closed beta test (CBT) campaign was launched using a rewarded engagement platform optimized for mobile games.

Key strategic elements included:

• Pre-launch targeting of high-intent mobile gamers, matched by gameplay preference

• Allowing optional reward settings to balance motivation with data purity

• Deploying features like hidden quests and time-sensitive challenges to analyze player behavior across key time windows

• Encouraging post-play feedback via built-in surveys

• Providing detailed performance reports to guide product and UA teams

Unlike traditional user testing, this campaign prioritized quality over quantity, enabling the publisher to observe retention-driving behaviors in a real-use context.

Results: Measurable Retention and Strategic Insights

The campaign delivered results on two critical fronts:

Retention & Virality Assessment

Players demonstrated strong engagement and repeat usage during the CBT period. By analyzing playtime patterns, quest participation, and session timing, the publisher was able to confirm that the game mechanics resonated with the target audience.

This not only validated the game’s readiness but also provided early retention benchmarks to forecast post-launch performance.

Data-Driven Game Improvements

Rich behavioral data and user feedback helped refine game balance, optimize tutorial flows, and tailor marketing creatives. The insights gathered influenced both product direction and go-to-market messaging, enabling a sharper launch strategy.

As a result, the publisher was able to approach launch with greater confidence — equipped with real user data, validated features, and a targeted re-engagement plan.

Strategic Summary: How to Calculate Retention Rate

Retention rate isn’t just a number — it’s a reflection of how valuable your product is to your users. By learning how to calculate, benchmark, and improve it, you can unlock real growth opportunities.

Key takeaways:

• Use the standard formula [(E - N) / S] × 100

• Compare performance across D1, D7, and D30 retention benchmarks

• Leverage reward-based strategies to incentivize repeat use

• Analyze cohorts to optimize the full user journey

• Choose platforms that go beyond installs and focus on retention-driven ROI

If you’re ready to apply retention-based strategies to your user acquisition or want to explore playtime-driven ad solutions, we’re here to help.

Reach out at [email protected] — Let’s build better retention together.

Want more insights like this? Download our latest Global Game Advertising Trends Report.

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E-mail: [email protected]