Mobile App Growth Strategy That Actually Works

The featured image for this blog post depicts a man painting an upward arrow, symbolizing growth and success. The mix of blue and yellow tones creates a strong contrast, making the image visually appealing. This visual aligns with the concept of strategic mobile app growth, emphasizing how businesses can scale effectively with the right approach. The bold typography on the image makes it clear that the focus is on a proven mobile app growth strategy. Ideal for capturing attention and reinforcing the topic at hand.

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For sustainable mobile app growth, you must focus on activation first, not acquisition! Let’s talk about how to avoid the ‘leaky bucket’ problem and efficiently grow your mobile app.

Here’s a recent conversation that I had:

“We want to double our mobile app user base in the next six months with a budget of $150,000. You’re the experts on app growth hacking, so you can help us, right?”

I took a deep breath.

“I don’t know,” I said. This was my honest answer to the game publisher on the conference call.

“I don’t know, because, to provide a meaningful answer, I need to understand your current number of daily active users (DAUs), the retention curvesegmented lifetime value (LTV) of users, and the cost of acquisition (CAC) for different segments of mobile users. Only then can I say if your growth target is feasible and provide you with a tailor-made mobile app growth strategy.”

And then, there was a silence…

A creative infographic illustrating Newton's Law applied to app marketing. The equation F = m * a is humorously redefined, linking the number of downloads to app quality and marketing efforts. This concept highlights the fundamental principles of mobile app growth. The visual style is bold, with a yellow background and an image of Isaac Newton, making it eye-catching for presentations or blog posts. Understanding this formula is essential for companies scaling their user base efficiently.

User Acquisition is the Easy Part of Mobile App Growth Strategy

The siloed thinking about user acquisition (UA) is most often seen in companies that aren’t mobile-first. This can also occur among founders and marketing managers who lack understanding of various areas such as product design, growth hacking, and marketing analytics.

The ‘leaky bucket’ problem is something that we have to regularly explain to our clients – and help them fix. It occurs because advertisers tend to overlook the underlying problem behind the flat, or even declining, curve of their mobile app’s user-base (which, in most cases, is caused by the product, not acquisition).

A motivational quote from Gillian Morris emphasizing that if you invest in growth before fixing retention, you're merely "renting users." The text is in bold black against a yellow background, making it highly readable. The message is crucial for startups and established companies looking to optimize their mobile business strategy. This quote resonates well with app growth marketers who understand the importance of keeping users engaged long-term. The framed border around the text gives it a structured and professional appearance.

The truth is that user acquisition is the easy part of mobile app growth when compared to activation, retention, revenue, and referral (AARRR of the famous pirate metrics model by Dave McClure).

These five metrics represent and reflect the user flow. The reality is that most startups tend to prioritize the first one: acquisition.

The main issue with this framework is that it describes the order in which the user interacts with the mobile app, rather than how the company should prioritize the work. Focus too much on acquisition and you’ll end up with the leaking bucket problem!

A colorful infographic breaking down essential business growth questions into categories like acquisition, activation, retention, revenue, and referral. Each section is color-coded, making it easy to navigate. The red arrow directs focus to the sequential importance of these priorities. This image is ideal for team discussions on how to optimize customer journey touchpoints. Companies can use it to align their strategies for sustainable and profitable growth.

The ‘Full Funnel’ Mobile App Growth Strategy

If I’m asked my opinion on the most effective app growth strategy, I always recommend the Full-Funnel Approach.

Analyzing the user journey using existing data leads to one of two scenarios:

  1. The mobile app is healthy, retains users and generates revenue. It’s ready to scale.
  2. The mobile app has issues related to activation, engagement and/or monetization. These need to be fixed before investing in UA. And that’s especially true in the post-IDFA era where targeting capabilities are worse and the necessity of a high LTV critical!
A business strategy quote discussing the Full-Funnel Approach in mobile marketing. The message highlights that retention and monetization should be optimized before scaling user acquisition. The structured text box and bold typography ensure clarity and readability. This quote serves as a reminder for decision-makers to avoid prioritizing acquisition over product quality. The emphasis on data-driven strategies makes this particularly relevant for growth consultants and product managers.

In case you are not sure if your app is ready, feel free to reach out at hi@appagent.com.

Over the years we have developed and refined viability calculators for mobile apps and can run a free scalability assessment for you.

Scenario 1 – A Healthy App Ready to Scale

Mobile apps with strong metrics are rare, but if you have one the only remaining question is: ‘how much can it scale?’

The answer to the question is closely related to two metrics: the ratio between lifetime value and cost per install (LTV and CPI), and the size of the addressable market.

Understanding LTV, CPI, and Market Scalability

The (positive) ratio between LTV and CPI shows the buffer against growing user acquisition cost before the UA eventually becomes unprofitable. When starting to invest in paid UA on ad networks like Facebook, you should go through three stages:

1. High CAC in the launch phase due to limited learnings of the best targeting, creatives, optimization type, lack of data, etc.

2. Low CAC coming with learnings and tapping into the most relevant users like Early Adopters for the lowest price.

3. Growing CAC caused by the extraction of the top users over time. This leads to a decrease in the relevance and quality of the base and, at some point, your UA strategy will become ineffective.

A performance marketing graph illustrating the relationship between customer acquisition cost (CAC) and the accumulated number of customers. The chart highlights three key phases: launch, early adopter, and audience extension. The steep drop in CAC followed by a slow increase showcases the challenges in maintaining cost efficiency over time. This graph is crucial for understanding scalability in mobile app growth strategies. Marketers can use this to evaluate whether their app is in a healthy growth phase or needs improvement.

The second aspect—the total addressable market—is highly related to your product and its focus. On one hand, the more niche your mobile app or game is, the more engaged users you will attract, but the smaller the potential pool is.

On the other hand, mobile apps with a broad appeal are competing for the attention of a much larger audience who are less likely to deeply engage with you—and less likely to want to pay for your product or service.

The limited size of the addressable market could be a serious issue if you choose a narrow segment. In some cases, the available audience might be so small that you may be unable to acquire enough users or players to cover the development, upkeep and marketing expenses associated with your mobile app.

Case Study: How Small Giant Games Scaled to $400K Daily Revenue

During our fireside chat at PGC Helsinki just a few days after Empires & Puzzles became one of the top 10 grossing games in the US Apple App Store, Antti Paikalla shared insight into the process behind the game’s creation:

“When researching the mobile app market for our third game at Small Giant Games (SGG), we spent months analyzing top-grossing charts. We looked into what top-performing games had in common, examined which game genres were attracting highly engaged audiences willing to spend on a game, and determined the size of these audiences. All of these inputs eventually led us to define what is today Empires & Puzzles.”

If you are aiming for a big hit, follow the approach taken by the founders of SGG. This rather small 45-member team demonstrates how a methodological and data-driven approach to mobile business can pay off. They’ve managed to scale a game that was delivering an impressive c/a $400K of daily revenue when Zynga announced the acquisition of the Finnish studio.

Scenario 2 – A Mobile App Experiencing Issues Isn’t Ready for Scaling

Some product issues can be fixed easily. But in some cases, even major tweaks to the product proposition won’t be enough to save it. Distinguishing whether your app can be salvaged or not is the hardest task for any product manager.

The most impactful pirate metric is activation. Luckily for you, fixing issues at the activation stage usually requires less investment than tackling issues that relate to long-term retention or monetization.

If you are unable to fix the drop in the conversion funnel at the activation stage, it means the value proposition isn’t strong enough and the product needs to be fundamentally changed…or killed.

Here, Dani Hart from GrowthHackers explains why activation is such an important step in the user journey:

“Without getting people to see the value of your product, they won’t come back which will make retention, referral, and revenue near impossible. Activation is where the most leverage is…if I could increase my conversion rates during the activation stage of the customer lifecycle, It would be much easier to decrease the cost per acquisition and provide an experience that makes the user likely to return.”

A thought-provoking quote from Dani Hart, explaining why activation is the most impactful stage in user retention. The bold, black typography on a bright yellow background ensures easy readability. The quote highlights how failing to activate users properly leads to poor retention and declining revenue. For mobile marketers, this message reinforces the need to focus on the onboarding experience. By improving activation, companies can lower customer acquisition costs (CAC) and increase lifetime value (LTV).

The Role of Retention and Paywall Optimization

Once you can see that your product/market fit is positive and there’s a healthy activation ratio (at least 80% of users finished onboarding, but this value is highly dependent on the app category and acquisition source), you should focus entirely on retention.

You should approach retention optimization in a step-by-step method; focus on fixing Day 1, then Day 3, then Day 7 retention, gradually building up to really long-term engagement. 

In the mobile industry, if you’re able to retain existing users at a steady rate, your chances of successful monetization are much higher. But this won’t happen overnight—it took eight years for Facebook and over three years for Snapchat to introduce monetization models. 

But if you do it right, you can achieve amazing results. One such example is Amazon, as analysts have pegged Prime’s yearly retention rate at over 90 percent!

Another crucial area is paywall optimization. As Dan Burcaw from Nami ML explains, “a common mistake is to spend a lot of time on marketing, on product pages, videos, etc., but not paying enough attention to the paywall screen.” 

A/B testing this critical point is essential for every app developer; we’ve seen massive revenue boost for our clients when using a rather basic set of tactics.

The New Mobile App Growth Strategy Handbook

Looking at the Full-Funnel Strategy leads me to an interesting question: are McClure’s famous metrics in the right order?

Yes, if you’re looking at them from the perspective of the user journey. However, I would dare to suggest that the answer is no if you are focused on the company’s priorities.

As a marketer, I may be shooting myself in the foot by saying that acquisition—or more specifically scaling the user base—should be the last task on any CEO’s list. But it’s what I believe.

Successfully marketing and monetizing over 50 mobile apps has led me to rearrange the pirate metrics into the following order:

A structured infographic showcasing how mobile app companies should prioritize their efforts. It arranges key focus areas in a descending order, emphasizing activation, retention, revenue, referral, and acquisition. The red arrow on the right side clearly directs attention to the hierarchy of priorities. Many companies mistakenly focus on acquisition first, but this visual reinforces why activation must come first. Perfect for C-level executives and team leaders seeking a sustainable approach to mobile growth.

While activation is where you can make the largest improvements in user retention and the subsequent metrics, a good retention rate means that you’re not just renting app users, but transforming them into raving fans.

And when you’re successfully retaining your customers, everything else—like revenue and receiving free referrals (aka the “magic virality”)—can be figured out.

This is by far the most effective approach for your budget, where every dollar, euro or pound spent on acquisition will generate the highest possible return on investment.

It doesn’t mean you can’t run any acquisition before having the fully optimized product (which you never will, as it’s a never-ending process).

For collecting data and evaluating changes, you of course need a statistically significant volume of users. But you must spend wisely in order to learn, tweak, improve, and—only then—to scale. And if you need to grow even with a leaky bucket, invest in less expensive tactics such as ASO, cross-promotional activities or featuring rather than burning money on paid-for UA.

Final Thoughts

The goal of this post is the give startup founders and CEOs an explanation of how they should look at growth priorities.

The message is: “It’s not acquisition where you should start if you want to grow – it’s activation.

Activation creates the biggest leverage, and retention makes the biggest improvement of all subsequent metrics, including a significant impact on your cost of acquisition.”

It’s also one of the reasons that AppAgent’s offering has expanded into onboarding and paywall optimization. We see a massive lever there, and if you can increase LTV by 63% after a couple of A/B tests, only then can you really unlock your app growth potential.

Continue Reading

If you would like more detailed information on effective app growth strategy, I recommend reading the three articles below which will give you more clarity on how to apply this new mindset to your work:

As this post is also touching the importance of activation, there are two other great libraries I would highly recommend you to check:

Many thanks to Tomas Petit, who helped me to compile this article with his apt comments, valuable advice and his brisk observations.

Happy growing!

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