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• Strategies for Reducing Bank Customer Acquisition Cost [2024]

  24 septembre 2024, par Daniel Crough — Banking and Financial Services

  Acquiring new customers is no small feat — regardless of the size of your team. The expenses of various marketing efforts tend to pile up fast, even more so when your business operates in a highly competitive industry like banking. At the same time, marketing budgets continue to decrease — dropping from an average of 9.1% of total company revenue in 2023 down to 7.7% in 2024 — prompting businesses in the financial services industry to figure out how they can do more with less.

  That brings us to bank customer acquisition cost (CAC) — a key business metric that can reveal quite a bit about your bank’s long-term profitability and potential for achieving sustainable growth. 

  This article will cover the ins and outs of bank customer acquisition costs and share actionable tips and strategies you can implement to reduce CAC.

  What is customer acquisition cost in banking ? 

  

  The global market volume of neobanks — fintech companies and digital banking platforms, often referred to as “challenger banks” — was estimated at $4.96 trillion in 2023. It’s expected to continue growing at a compound annual growth rate (CAGR) of 13.15% in the coming years, potentially reaching $10.44 trillion by 2028.

  That’s enough of an indicator that the financial services industry is now a highly competitive landscape where companies are often competing for the attention of a relatively limited audience. 

  Plus, several app-only banks based in Europe have made significant progress in attracting new customers to their financial products : 

  

  Unsurprisingly, this flurry of competition is putting upward pressure on customer acquisition and retention costs across the banking sector.

  Customer acquisition cost (CAC) — the sum of all costs and resources related to acquiring an additional customer — is one of the key business metrics to keep an eye on when trying to maximise your return on investment (ROI) and profitability, especially if your company operates in the banking industry.

  Here’s the basic formula you can use to calculate the cost of acquisition in banking : 

  Customer Acquisition Cost (CAC) = Total Amount Spent (TS) / Total New Customers Acquired (TNC)

  In essence, it requires you to divide the total cost of acquiring consumers — including sales and marketing expenses — by the total number of new customers your company has gained within a specific timeframe.

  There’s one thing you need to keep in mind : 

  The customer acquisition process involves more than just your marketing and sales departments. 

  While marketing and sales channels play a crucial role in this process, the list of expenses that may contribute to customer acquisition costs in banking goes well beyond that. 

  Here’s a quick breakdown of the customer acquisition cost formula to show you which costs make up the total amount spent : 

  • All advertising and marketing costs, including traditional (direct mail, billboards, TV and print advertising) and digital channels (email, Google ads, social media and influencer marketing)
  • Cost of outsourced marketing services, including any independent contractors involved in the process 
  • Salaries and commissions for the marketing team and sales representatives
  • Software subscriptions, including marketing software and web analytics tools 
  • Other overhead and operational costs 

  And until you’ve taken all these expenses into account, you won’t be able to accurately estimate how much it actually costs you to attract potential customers.

  Another thing to keep in mind is that there’s no universal definition of “good CAC.” 

  The average customer acquisition cost varies across different industries and business models. That said, you can generally expect a higher-than-average CAC in highly competitive sectors — namely, the financial, manufacturing and real estate industries. 

  Importance of tracking customer acquisition cost in banking 

  

  Customer acquisition costs are an important indicator of a banking business’s potential growth and profitability. Monitoring this fundamental business metric can provide data-driven insights about your current bank customer acquisition strategy — and offers a few notable benefits : 

  • Measuring the performance and effectiveness of different channels and campaigns and making data-driven decisions regarding future marketing efforts
  • Improving return on investment (ROI) by determining the most effective strategies for acquiring new customers 
  • Improving profitability by assessing the value per customer and improving profit margins 
  • Benchmarking against industry competitors to see where your business’s CAC stands compared to the banking industry average

  At the risk of stating the obvious, acquiring new customers isn’t always easy. That’s true for many highly competitive industries — especially the banking sector, which is currently witnessing the rapid rise of digital disruptors. 

  Case in point, the fintech market alone is currently valued at $312.98 billion and is expected to reach $556.70 billion by 2030, following a CAGR of 14%.

  

  However, strong competition is only one of the challenges banks face throughout the process of attracting potential customers. 

  Here are a few other things to keep in mind : 

  • Ethical business practices and strict compliance requirements when it comes to the privacy and security of customer data, including meeting data protection standards and ensuring regulatory compliance
  • Lack of personalisation throughout the customer journey, which today’s customers view as a lack of understanding of — and even interest in — their needs and preferences 
  • Limited mobile banking capabilities, which further points to a failure to innovate and adapt — one of the leading risks that financial services may face 

  7 strategies for reducing bank customer acquisition costs 

  

  When working on optimising your banking customer acquisition strategy, the key thing to keep in mind is that there are two sides to improving CAC : 

  On the one hand, you have efforts to decrease the costs associated with acquiring a new customer — and on the other, you have the importance of attracting high-value customers. 

  1. Eliminate friction points in the customer onboarding process

  One of the first things financial institutions should do is examine their existing digital onboarding process and look for friction points that might cause potential customers to drop off. After all, a streamlined onboarding process will minimise barriers to conversion, increasing the number of new customers acquired and improving overall customer satisfaction. 

  Keep in mind that, at the 30-day mark, finance mobile apps have an average user retention rate of 3% : 

  

  That says a lot about the importance of providing a frictionless onboarding experience as a retail bank or any other financial institution. 

  Granted, a single point of friction is rarely enough to cause customers to churn. It’s typically a combination of several factors — a lengthy sign-up process with complicated password requirements and time-consuming customer identification or poor customer service, for example — that occur during the key moments of the customer journey.

  In order to keep tabs on customer experiences across different touchpoints and spot potential barriers in their journey, you’ll need a reliable source of data. Matomo’s Funnels report can show you exactly where your website visitors are dropping off. 

  2. Get more personalised with your marketing efforts 

  Generic experiences are rarely the way to go — especially when you’re contending for the attention of prospective customers in such a competitive sector. 

  Besides, 62% of people who made an online purchase within the last six months have said that brands would lose their loyalty following a non-personalised experience. 

  What’s more shocking is that only a year earlier, that number stood at 45%.

  

  When it comes to improving marketing efficiency and sales strategies, 94% of marketers agree that personalisation is key : 

  

  It’s evident that personalised marketing supported by behavioural segmentation can significantly improve conversion rates — and, most importantly, reduce acquisition costs. 

  Of course, it’s virtually impossible to deliver targeted, personalised marketing messaging without creating audience segments and detailed buyer personas. Matomo’s Segmentation feature can help by allowing you to split website visitors into smaller groups and get much-needed insights for behavioural segmentation. 

  3. Build an omnichannel marketing strategy 

  Customer expectations, behaviours and preferences are constantly evolving, making it crucial for financial services to adapt their customer acquisition strategies accordingly. Meeting prospective customers on their preferred channels is a big part of that. 

  The issue is that modern banking customers tend to move across different channels. That’s one of the reasons why it’s becoming increasingly more difficult to deliver a unified experience throughout the entire customer journey and close the gap between digital and in-person customer interactions. 

  Omnichannel marketing gives you a way to keep up with customers’ ever-evolving expectations :

  Adopting this marketing strategy will allow you to meet customers where they are and deliver a seamless experience across a wide range of digital channels and touchpoints, leading to more exposure — and, ultimately, increasing the number of acquired customers.

  Matomo can support your omnichannel efforts by providing accurate, unsampled data needed for cross-channel analytics and marketing attribution. 

  4. Work on your social media presence 

  Social networks are among the most popular — and successful — digital marketing channels, with millions (even billions, depending on the platform) of active users. 

  In fact, 89% of marketers report using Facebook as their main platform for social media marketing, while another 80% use Instagram to reach their target audience and promote their business. 

  

  And according to The State of Social Media in Banking 2023 report, nine out of ten banks (89%) consider social media is important, while another 88% are active on their social media accounts. 

  That is to say, even traditionally conservative industries — like banking and finance — realise the crucial role of social media in promoting their services and engaging with customers on their preferred channels : 

  It’s an excellent way for businesses in the financial sector to gain exposure, drive traffic to their website and acquire new customers. 

  If you’re ready to improve social media visibility as part of your multichannel efforts, Matomo can help you track social media activity across 70 different platforms. 

  5. Shift the focus on customer loyalty and retention 

  Up until this point, the focus has mainly been on building new business relationships. However, one thing to keep in mind is that retaining existing customers is generally cheaper than investing in customer acquisition activities to attract new ones. 

  Of course, customer retention won’t directly impact your CAC. But what it can do is increase customer lifetime value, contributing to your company’s revenue and profits — which, in turn, can “balance out” your acquisition costs in the long run.

  That’s not to say that you should stop trying to bring in new clients ; far from it. 

  However, focusing on increasing customer loyalty — namely, delivering excellent customer service and building lasting business relationships — could motivate satisfied customers to become brand advocates. 

  As this survey of customer satisfaction for leading banks in the UK has shown, when clients are satisfied with a bank’s products and services, they’re more likely to recommend it. 

  

  Positive word-of-mouth recommendations can be a powerful way to drive customer acquisition. You can leverage that by launching a customer referral program and incentivising loyal customers to refer new ones to your business. 

  6. A/B test different elements to find ones that work 

  We’ve already underlined the importance of understanding your audience ; it’s the foundation for optimising the customer journey and delivering targeted marketing efforts that will attract more customers. 

  Another proven method that can be used to refine your customer acquisition strategy is A/B or split testing. 

  It involves testing different versions of specific elements of your marketing content — such as language, CTAs and visuals — to determine the most effective combinations that resonate with your target audience. 

  Besides your marketing campaigns, you can also split test different variants of your website or mobile app to see which version gets them to convert. 

  Matomo’s A/B Testing feature can be of huge help here : 

  

  7. Track other relevant customer acquisition metrics 

  To better assess your company’s profitability, you’ll have to go beyond CAC and factor in other critical metrics — namely, customer lifetime value (CLTV), churn rate and return on investment (ROI). 

  Here are the most important KPIs you should monitor in addition to CAC : 

  • Customer lifetime value (CLTV), which represents the revenue generated by a single customer throughout the duration of their relationship with your company and is another crucial indicator of customer profitability 
  • Churn rate — the rate at which your company loses clients within a given timeframe — can indicate how well you’re retaining customers 
  • Return on investment (ROI) — the revenue generated by new clients compared to the initial costs of acquiring them — can help you identify the most effective customer acquisition channels 

  These metrics work hand in hand. There needs to be a balance between the revenue the customer generates over their lifetime and the costs related to attracting them.

  Ideally, you should be aiming for lower CAC and customer churn and higher CLTV ; that’s usually a solid indicator of financial health and sustainable growth. 

  Lower bank customer acquisition costs with Matomo 

  Acquiring new customers will require a lot of time and resources, regardless of the industry you’re working in — but can be even more challenging in the financial sector, where you have to adapt to the ever-changing customer expectations and demands. 

  The strategies outlined above — combined with a thorough understanding of your customer’s behaviours and preferences — can help you lower the cost of bank customer acquisition.

  On that note, you can learn a lot about your customers through web analytics — and use those insights to support your customer acquisition process and ensure you’re delivering a seamless online banking experience. 

  If you need an alternative to Google Analytics that doesn’t rely on data sampling and ensures compliance with the strictest privacy regulations, all while being easy to use, choose Matomo — the go-to web analytics platform for more than 1 million websites around the globe. 

  CTA : Start your 21-day free trial today to see how Matomo’s all-in-one solution can help you understand and attract new customers — all while respecting their privacy. 

• A Quick Start Guide to the Payment Services Directive (PSD2)

  22 novembre 2024, par Daniel Crough — Banking and Financial Services, Privacy

  In 2023, there were 266.2 billion real-time payments indicating that the demand for secure transactions has never been higher. As we move towards a more open banking system, there are a host of new payment solutions that offer convenience and efficiency, but they also present new risks.

  The Payment Services Directive 2 (PSD2) is one of many regulations established to address these concerns. PSD2 is a European Union (EU) business initiative to offer smooth payment experiences while helping customers feel safe from online threats. 

  In this post, learn what PSD2 includes, how it improves security for online payments, and how Matomo supports banks and financial institutions with PSD2 compliance.

  What is PSD2 ? 

  PSD2 is an EU directive that aims to improve the security of electronic payments across the EU. It enforces strong customer authentication and allows third-party access to consumer accounts with explicit consent. 

  Its main objectives are :

  • Strengthening security and data privacy measures around digital payments.
  • Encouraging innovation by allowing third-party providers access to banking data.
  • Improving transparency with clear communication regarding fees, terms and conditions associated with payment services.
  • Establishing a framework for sharing customer data securely through APIs for PSD2 open banking.

  Rationale behind PSD2 

  PSD2’s primary purpose is to engineer a more integrated and efficient European payment market without compromising the security of online transactions. 

  The original directive aimed to standardise payment services across EU member states, but as technology evolved, an updated version was needed.

  PSD2 is mandatory for various entities within the European Economic Area (EEA), like :

  • Banks and credit institutions
  • Electronic money institutions or digital banks like Revolut
  • Card issuing and acquiring institutions
  • Fintech companies
  • Multi-national organisations operating in the EU

  PSD2 implementation timeline

  With several important milestones, PSD2 has reshaped how payment services work in Europe. Here’s a closer look at the pivotal events that paved the way for its launch.

  • 2002 : The banking industry creates the European Payments Council (EC), which drives the Single Euro Payments Area (SEPA) initiative to include non-cash payment instruments across European regions. 
  • 2007 : PSD1 goes into effect.
  • 2013 : EC proposes PSD2 to include protocols for upcoming payment services.
  • 2015 : The Council of European Union passes PSD2 and gives member states two years to incorporate it.
  • 2018 : PSD2 goes into effect. 
  • 2019 : The final deadline for all companies within the EU to comply with PSD2’s regulations and rules for strong customer authentication. 

  PSD2 : Key components 

  PSD2 introduces several key components. Let’s take a look at each one.

  Strong Customer Authentication (SCA)

  The Regulatory Technical Standards (RTS) under PSD2 outline specific requirements for SCA. 

  SCA requires multi-factor authentication for online transactions. When customers make a payment online, they need to verify their identity using at least two of the three following elements :

  • Knowledge : Something they know (like a password, a code or a secret answer)
  • Possession : Something they have (like their phone or card)
  • Inherence : Something they are (like biometrics — fingerprints or facial features)

  

  Before SCA, banks verified an individual’s identity only using a password. This dual verification allows only authorised users to complete transactions. SCA implementation reduces fraud and increases the security of electronic payments.

  SCA implementation varies for different payment methods. Debit and credit cards use the 3D Secure (3DS) protocol. E-wallets and other local payment measures often have their own SCA-compliant steps. 

  3DS is an extra step to authenticate a customer’s identity. Most European debit and credit card companies implement it. Also, in case of fraudulent chargebacks, the issuing bank becomes liable due to 3DS, not the business. 

  However, in SCA, certain transactions are exempt : 

  • Low-risk transactions : A transaction by an issuer or an acquirer whose fraud level is below a specific threshold. If the acquirer feels that a transaction is low risk, they can request to skip SCA. 
  • Low-value transactions : Transactions under €30.
  • Trusted beneficiaries : Trusted merchants customers choose to safelist.
  • Recurring payments : Recurring transactions for a fixed amount are exempt from SCA after the first transaction.

  Third-party payment service providers (TPPs) framework

  TPPs are entities authorised to access customer banking data and initiate payments. There are three types of TPPs :

  Account Information Service Providers (AISPs)

  AISPs are services that can view customers’ account details, but only with their permission. For example, a budgeting app might use AISP services to gather transaction data from a user’s bank account, helping them monitor expenses and oversee finances. 

  Payment Initiation Service Providers (PISPs)

  PISPs enable clients to initiate payments directly from their bank accounts, bypassing the need for conventional payment options such as debit or credit cards. After the customer makes a payment, PISPs immediately contact the merchant to ensure the user can access the online services or products they bought. 

  Card-Based Payment Instruments (CBPII)

  CBPIIs refer to services that issue payment cards linked to customer accounts. 

  Requirements for TPPs

  To operate effectively under PSD2, TPPs must meet several requirements :

  Consumer consent : Customers must explicitly authorise TPPs to retrieve their financial data. This way, users can control who can view their information and for what purpose.

  Security compliance : TPPs must follow SCA and secure communication guidelines to protect users from fraud and unauthorised access.

  API availability : Banks must make their Application Programming Interfaces (APIs) accessible and allow TPPs to connect securely with the bank’s systems. This availability helps in easy integration and lets TPPs access essential data. 

  Consumer protection methods

  PSD2 implements various consumer protection measures to increase trust and transparency between consumers and financial institutions. Here’s a closer look at some of these key methods :

  • Prohibition of unjustified fees : PSD2 requires banks to clearly communicate any additional charges or fees for international transfers or account maintenance. This ensures consumers are fully aware of the actual costs and charges.
  • Timely complaint resolution : PSD2 mandates that payment service providers (PSPs) have a straightforward complaint procedure. If a customer faces any problems, the provider must respond within 15 business days. This requirement encourages consumers to engage more confidently with financial services.
  • Refund in case of unauthorised payment : Customers are entitled to a full refund for payments made without their consent.
  • Surcharge ban : Additional charges on credit and debit card payments aren’t allowed. Businesses can’t impose extra fees on these payment methods, which increases customers’ purchasing power.

  Benefits of PSD2 

  Businesses — particularly those in banking, fintech, finserv, etc. — stand to benefit from PSD2 in several ways.

  Access to customer data

  With customer consent, banks can analyse spending patterns to develop tailored financial products that match customer needs, from personalised savings accounts to more relevant loan offerings.

  Innovation and cost benefits 

  PSD2 opened payment processing up to more market competition. New payment companies bring fresh approaches to banking services, making daily transactions more efficient while driving down processing fees across the sector.

  Also, banks now work alongside payment technology providers, combining their strengths to create better services. This collaboration brings faster payment options to businesses, helping them stay competitive while reducing operational costs.

  Improved customer trust and experience

  Due to PSD2 guidelines, modern systems handle transactions quickly without compromising the safety of payment data, creating a balanced approach to digital banking.

  

  Banking customers now have more control over their financial information. Clear processes allow consumers to view and adjust their financial preferences as needed.

  Strong security standards form the foundation of these new payment systems. Payment provider platforms must adhere to strict regulations and implement additional protection measures.

  Challenges in PSD2 compliance 

  What challenges can banks and financial institutions face regarding PSD2 compliance ? Let’s examine them. 

  Resource requirements

  For many businesses, the new requirements come with a high price tag. PSD2 requires banks and fintechs to build and update their systems so that other providers can access customer data safely. For example, they must develop APIs to allow TPPs to acquire customer data. 

  Many banks still use older systems that can’t meet PSD2’s added requirements. In addition to the cost of upgrades, complying with PSD2 requires banks to devote resources to training staff and monitoring compliance.

  The significant costs required to update legacy systems and IT infrastructure while keeping services running remain challenging.

  Risks and penalties

  Organisations that fail to comply with PSD2 regulations can face significant penalties.

  Additionally, the overlapping requirements of PSD2 and other regulations, such as the General Data Protection Regulation (GDPR), can create confusion. 

  Banks need clear agreements with TPPs about who’s responsible when things go wrong. This includes handling data breaches, preventing data misuse and protecting customer information. 

  Increased competition 

  Introducing new players in the financial ecosystem, such as AISPs and PISPs, creates competition. Banks must adapt their services to stay competitive while managing compliance costs.

  PSD2 aims to protect customers but the stronger authentication requirements can make banking less convenient. Banks must balance security with user experience. Focused time, effort and continuous monitoring are needed for businesses to stay compliant and competitive.

  How Matomo can help 

  Matomo gives banks and financial institutions complete control over their data through privacy-focused web analytics, keeping collected information internal rather than being used for marketing or other purposes. 

  Its advanced security setup includes access controls, audit logs, SSL encryption, single sign-on and two-factor authentication. This creates a secure environment where sensitive data remains accessible only to authorised staff.

  While prioritizing privacy, Matomo provides tools to understand user flow and customer segments, such as session recordings, heatmaps and A/B testing.

  Financial institutions particularly benefit from several key features : 

  • Tools for obtaining explicit consent before processing personal data like this Do Not Track preference
  • Insights into how financial institutions integrate TPPs (including API usage, user engagement and potential authentication drop-off points)
  • Tracking of failed login attempts or unusual access patterns
  • IP anonymization to analyse traffic patterns and detect potential fraud

  

  PSD3 : The next step 

  In recent years, we have seen the rise of innovative payment companies and increasingly clever fraud schemes. This has prompted regulators to propose updates to payment rules.

  PSD3’s scope is to adapt to the evolving digital transformation and to better handle these fraud risks. The proposed measures : 

  • Encourage PSPs to share fraud-related information.
  • Make customers aware of the different types of fraud.
  • Strengthen customer authentication standards.
  • Provide non-bank PSPs restricted access to EU payment systems. 
  • Enact payment rules in a directly applicable regulation and harmonise and enforce the directive.

  Web analytics that respect user privacy 

  Achieving compliance with PSD2 may be a long road for some businesses. With Matomo, organisations can enjoy peace of mind knowing their data practices align with legal requirements.

  Ready to stop worrying over compliance with regulations like PSD2 and take control of your data ? Start your 21-day free trial with Matomo.

• A Guide to App Analytics Tools that Drive Growth

  7 mars, par Daniel Crough — App Analytics

  Mobile apps are big business, generating £438 billion in global revenue between in-app purchases (38%) and ad revenue (60%). And with 96% of apps relying on in-app monetisation, the competition is fierce.

  To succeed, app developers and marketers need strong app analytics tools to understand their customers’ experiences and the effectiveness of their development efforts.

  This article discusses app analytics, how it works, the importance and benefits of mobile app analytics tools, key metrics to track, and explores five of the best app analytics tools on the market.

  What are app analytics tools ?

  Mobile app analytics tools are software solutions that provide insights into how users interact with mobile applications. They track user behaviour, engagement and in-app events to reveal what’s working well and what needs improvement.

  Insights gained from mobile app analytics help companies make more informed decisions about app development, marketing campaigns and monetisation strategies.

  What do app analytics tools do ?

  App analytics tools embed a piece of code, called a software development kit (SDK), into an app. These SDKs provide the essential infrastructure for the following functions :

  • Data collection : The SDK collects data within your app and records user actions and events, like screen views, button clicks, and in-app purchases.
  • Data filtering : SDKs often include mechanisms to filter data, ensuring that only relevant information is collected.
  • Data transmission : Once collected and filtered, the SDK securely transmits the data to an analytics server. The SDK provider can host this server (like Firebase or Amplitude), or you can host it on-premise.
  • Data processing and analysis : Servers capture, process and analyse large stores of data and turn it into useful information.
  • Visualisation and reporting : Dashboards, charts and graphs present processed data in a user-friendly format.

  

  Six ways mobile app analytics tools fuel marketing success and drive product growth

  Mobile app analytics tools are vital in driving product development, enhancing user experiences, and achieving business objectives.

  #1. Improving user understanding

  The better a business understands its customers, the more likely it is to succeed. For mobile apps, that means understanding how and why people use them.

  Mobile analytics tools provide detailed insights into user behaviours and preferences regarding apps. This knowledge helps marketing teams create more targeted messaging, detailed customer journey maps and improve user experiences.

  It also helps product teams understand the user experience and make improvements based on those insights.

  For example, ecommerce companies might discover that users in a particular area are more likely to buy certain products. This allows the company to tailor its offers and promotions to target the audience segments most likely to convert.

  #2 Optimising monetisation strategies for increased revenue and user retention

  In-app purchases and advertising make up 38% and 60% of mobile app revenue worldwide, respectively. App analytics tools provide insights companies need to optimise app monetisation by :

  • Analysing purchase patterns to identify popular products and understand pricing sensitivities.
  • Tracking in-app behaviour to identify opportunities for enhancing user engagement.

  App analytics can track key metrics like visit duration, user flow, and engagement patterns. These metrics provide critical information about user experiences and can help identify areas for improvement.

  How meaningful are the impacts ?

  Duolingo, the popular language learning app, reported revenue growth of 45% and an increase in daily active users (DAU) of 65% in its Q4 2023 financial report. The company attributed this success to its in-house app analytics platform.

  

  #3. Understanding user experiences

  Mobile app analytics tools track the performance of user interactions within your app, such as :

  • Screen views : Which screens users visit most frequently
  • User flow : How users navigate through your app
  • Session duration : How long users spend in your app
  • Interaction events : Which buttons, features, and functions users engage with most

  Knowing how users interact with your app can help refine your approach, optimise your efforts, and drive more conversions.

  #4. Personalising user experiences

  A recent McKinsey survey showed that 71% of users expect personalised app experiences. Product managers must stay on top of this since 76% of users get frustrated if they don’t receive the personalisation they expect.

  Personalisation on mobile platforms requires data capture and analysis. Mobile analytics platforms can provide the data to personalise the user onboarding process, deliver targeted messages and recommend relevant content or offers.

  Spotify is a prime example of personalisation done right. A recent case study by Pragmatic Institute attributed the company’s growth to over 500 million active daily users to its ability to capture, analyse and act on :

  • Search behaviour
  • Individual music preferences
  • Playlist data
  • Device usage
  • Geographical location

  The streaming service uses its mobile app analytics software to turn this data into personalised music recommendations for its users. Spotify also has an in-house analytics tool called Spotify Premium Analytics, which helps artists and creators better understand their audience.

  #5. Enhancing app performance

  App analytics tools can help identify performance issues that might be affecting user experience. By monitoring metrics like load time and app performance, developers can pinpoint areas that need improvement.

  Performance optimisation is crucial for user retention. According to Google research, 53% of mobile site visits are abandoned if pages take longer than three seconds to load. While this statistic refers to websites, similar principles apply to apps—users expect fast, responsive experiences.

  Analytics data can help developers prioritise performance improvements by showing which screens or features users interact with most frequently, allowing teams to focus their optimisation efforts where they’ll have the greatest impact.

  #6. Identifying growth opportunities

  App analytics tools can reveal untapped opportunities for growth by highlighting :

  • Features users engage with most
  • Underutilised app sections that might benefit from redesign
  • Common user paths that could be optimised
  • Moments where users tend to drop off

  This intelligence helps product teams make data-informed decisions about future development priorities, feature enhancements, and potential new offerings.

  For example, a streaming service might discover through analytics that users who create playlists have significantly higher retention rates. This insight could lead to development of enhanced playlist functionality to encourage more users to create them, ultimately boosting overall retention.

  Key app metrics to track

  Using mobile analytics tools, you can track dozens of key performance indicators (KPIs) that measure everything from customer engagement to app performance. This section focuses on the most important KPIs for app analytics, classified into three categories :

  • App performance KPIs
  • User engagement KPIs
  • Business impact KPIs

  While the exact metrics to track will vary based on your specific goals, these fundamental KPIs form the foundation of effective app analytics.

  

  App performance KPIs

  App performance metrics tell you whether an app is reliable and operating properly. They help product managers identify and address technical issues that may negatively impact user experiences.

  Some key metrics to assess performance include :

  • Screen load time : How quickly screens load within your app
  • App stability : How often your app crashes or experiences errors
  • Response time : How quickly your app responds to user interactions
  • Network performance : How efficiently your app handles data transfers

  User engagement KPIs

  Engagement KPIs provide insights into how users interact with an app. These metrics help you understand user behaviour and make UX improvements.

  Important engagement metrics include :

  • Returning visitors : A measure of how often users return to an app
  • Visit duration : How long users spend in your app per session
  • User flow : Visualisation of the paths users take through your app, offering insights into navigation patterns
  • Event tracking : Specific interactions users have with app elements
  • Screen views : Which screens are viewed most frequently

  Business impact KPIs

  Business impact KPIs connect app analytics to business outcomes, helping demonstrate the app’s value to the organisation.

  Key business impact metrics include :

  • Conversion events : Completion of desired actions within your app
  • Goal completions : Tracking when users complete specific objectives
  • In-app purchases : Monitoring revenue from within the app
  • Return on investment : Measuring the business value generated relative to development costs

  Privacy and app analytics : A delicate balance

  While app analytics tools can be a rich source of user data, they must be used responsibly. Tracking user in-app behaviour and collecting user data, especially without consent, can raise privacy concerns and erode user trust. It can also violate data privacy laws like the GDPR in Europe or the OCPA, FDBR and TDPSA in the US.

  With that in mind, it’s wise to choose user-tracking tools that prioritise user privacy while still collecting enough data for reliable analysis.

  Matomo is a privacy-focused web and app analytics solution that allows you to collect and analyse user data while respecting user privacy and following data protection rules like GDPR.

  The five best app analytics tools to prove marketing value

  In this section, we’ll review the five best app analytics tools based on their features, pricing and suitability for different use cases.

  Matomo — Best for privacy-compliant app analytics

  Matomo app analytics is a powerful, open-source platform that prioritises data privacy and compliance.

  

  It offers a suite of features for tracking user engagement and conversions across websites, mobile apps and intranets.

  Key features

  • Complete data ownership : Full control over your analytics data with no third-party access
  • User flow analysis : Track user journeys across different screens in your app
  • Custom event tracking : Monitor specific user interactions with customisable events
  • Ecommerce tracking : Measure purchases and product interactions
  • Goal conversion monitoring : Track completion of important user actions
  • Unified analytics : View web and app analytics in one platform for a complete digital picture

  Benefits

  • Eliminate compliance risks without sacrificing insights
  • Get accurate data with no sampling or data manipulation
  • Choose between self-hosting or cloud deployment
  • Deploy one analytics solution across your digital properties (web and app) for a single source of truth

  Pricing

  Plan	Price
  Cloud	Starts at £19/month
  On-Premise	Free

  Matomo is a smart choice for businesses that value data privacy and want complete control over their analytics data. It’s particularly well-suited for organisations in highly regulated industries, like banking.

  While Matomo’s app analytics features focus on core analytics capabilities, its privacy-first approach offers unique advantages. For organisations already using Matomo for web analytics, extending to mobile creates a unified analytics ecosystem with consistent privacy standards across all digital touchpoints, giving organisations a complete picture of the customer journey.

  Firebase — Best for Google services integration

  Firebase is the mobile app version of Google Analytics. It’s the most popular app analytics tool on the market, with over 99% of Android apps and 77% of iOS apps using Firebase.

  

  Firebase is popular because it works well with other Google services. It also has many features, like crash reporting, A/B testing and user segmentation.

  Pricing

  Plan	Price
  Spark	Free
  Blaze	Pay-as-you-go based on usage
  Custom	Bespoke pricing for high-volume enterprise users

  Adobe Analytics — Best for enterprise app analytics

  Adobe Analytics is an enterprise-grade analytics solution that provides valuable insights into user behaviour and app performance.

  

  It’s part of the Adobe Marketing Cloud and integrates easily with other Adobe products. Adobe Analytics is particularly well-suited for large organisations with complex analytics needs.

  Pricing

  Plan	Price
  Select	Pricing on quote
  Prime	Pricing on quote
  Ultimate	Pricing on quote

  While you must request a quote for pricing, Scandiweb puts Adobe Analytics at £2,000/mo–£2,500/mo for most companies, making it an expensive option.

  Apple App Analytics — Best for iOS app analysis

  Apple App Analytics is a free, built-in analytics tool for iOS app developers.

  

  This analytics platform provides basic insights into user engagement, app performance and marketing campaigns. It has fewer features than other tools on this list, but it’s a good place for iOS developers who want to learn how their apps work.

  Pricing

  Apple Analytics is free.

  Amplitude — Best for product analytics

  Amplitude is a product analytics platform that helps businesses understand user behaviour and build better products.

  

  It excels at tracking user journeys, identifying user segments and measuring the impact of product changes. Amplitude is a good choice for product managers and data analysts who want to make informed decisions about product development.

  Pricing

  Plan	Price
  Starter	Free
  Plus	From £49/mo
  Growth	Pricing on quote

  Choose Matomo’s app analytics to unlock growth

  App analytics tools help marketers and product development teams understand user experiences, improve app performance and enhance products. Some of the best app analytics tools available for 2025 include Matomo, Firebase and Amplitude.

  However, as you evaluate your options, consider taking a privacy-first approach to app data collection and analysis, especially if you’re in a highly regulated industry like banking or fintech. Matomo Analytics offers a powerful and ethical solution that allows you to gain valuable insights while respecting user privacy.

  Ready to take control of your app analytics ? Start your 21-day free trial.