Despite being the middle layer of the stack, nailing engagement & retention are likely to be the initial focus of any new app in the early days.
Engagement and retention are inextricably linked. It might be possible to get users back once or twice to a mobile product with a well-crafted push notification or a re-targeting campaign, but they certainly won’t stick around over the long term unless they find the product engaging i.e. they are finding some value or enjoyment from using the product such that they feel compelled to keep using it.
As such, ‘retention’ can be considered something of a higher level metric that encapsulates engagement. It’s also possible to compare user retention numbers across different apps, since it’s a standardized metric (though beware different calculation methods and confusing terminology). Engagement, on the other hand, tends to be measured in terms that are unique/specific to the product at hand, since these tend to be better barometers of valuable engagement than generic measurements such as ‘sessions’ or ‘time spent in app’.
Example: A music streaming app might look at metrics such as Listening Time, Playlists Created, Tracks Shared, etc. as key engagement metrics, since these represent the high value actions a user can perform within the app. These metrics are quite specific to music streaming and not directly comparable to, say, a fitness app, which would likely use metrics such as Exercises Tracked, Goals Completed, etc.
Metrics used to measure engagement should allow valuable and actionable segmentation that identifies the most valuable users, according to their level of activity within the product. Retention metrics tend to be a decent proxy for this, but don’t provide the finer detail of exactly what the user does within the product or the frequency with which they do these actions.
Retention is typically measured in terms of cohorts of users who first used the product on a certain date. By looking at how cohorts develop over time and how many users return to the product to use it on subsequent days, weeks, months, or even years, the team can get a sense of how ‘sticky’ the product is and whether it is being improved over time.
Growth is good, but Retention is 4+Ever (YouTube) from Brian Balfour, growth legend.
Cohort Analysis 101 from RJMetrics
Mobile Retention Benchmarks Q1 2016 from Adjust.io