The Hidden Secret of Growth: Retention

This is one of the more misunderstood concepts when it comes to growth. It may even be somewhat counterintuitive for those not working in the space. But for most people, their intuition around growth is to equate it with acquiring more users.

In other words, how can we acquire lots of new people?

That’s certainly true in one sense. And most definitely the top priority in certain circumstances. For example — you definitely need to acquire new users if you’re just starting out and you have no one using your product. Full stop. But that mindset and logic needs to adapt as you’ve acquired your first set of users and your product matures over time. Acquiring more users is only half of the game at best.

After you acquire your very first set of users, the name of the game starts to shift toward retention. How do we retain the users that we’ve acquired? How do we ensure they keep on coming back to our solution? How do we deepen their engagement?

Acquisition without retention is the prototypical ‘leaky bucket.’ It’s hard to fill up that bucket if there’s a gaping hole at the bottom no matter how much water you add in. Just visualize that for a second. Things get frantic very quickly. You have to hustle twice as hard just to keep the amount of water in the bucket level as it was a fraction of a second prior.

The same applies for growing your user base.

A user is considered new only one time upon their very first visit. Should they continue to use your product, they’ll be a returning user every time thereafter — a retained user. If we really zoom out and look at things from the most macro of macro perspectives, there’s only a fixed amount of people on this planet. And there’s only a fixed amount of potential users of your product in your target audience. If your growth game plan is solely predicated on acquiring new people, you’re going to run out of new people to acquire at some point in time. Growth will need to entail strong retention. Otherwise, you’ll end up in a less than ideal circumstance.

Twitter is a perfect real life (cautionary) example.

Most people know Twitter. Why? In large part it’s because many people are exposed to the product through natural usage and it’s very much made its way into broader public discourse. If you think about how many people see/hear/reference tweets, Twitter is an absolute acquisition machine. The problem with Twitter is that they never managed to retain enough of those people that were exposed to their product. They were absolutely brilliant with respect to putting their product in front of new people, but they didn’t capitalize on the opportunity by convincing enough of those people to become tweeters themselves. For many people, they simply didn’t see the use case for themselves to tweet.

Nowadays — Twitter is in an incredibly difficult predicament of having to resurrect ‘dormant’ users into active users. Resurrecting people that were once acquired, but churned. In other words, they have the unenviable challenge of convincing people that have already formed negative opinions about their product to change their minds. It’s an uphill battle.

They could have avoided this by focusing more on retention in its early days. Sure — it’s the sexy thing to be acquiring new users in droves. But if you’re not making sure they’re being retained, you’re potentially setting yourself up for an awfully difficult predicament. It’s a much more difficult proposition to resurrect dormant users than it is to try to retain them before they even churn. It’s the prototypical — ‘move slow now to move fast later’ approach.

Now let’s take the flip side where retention is strong and for every user you acquire, a large proportion of them become recurring users. Acquisition is still incredibly important, but now you can be rest assured that you’re adding those newly acquired people on a growing existing user base. With every passing day, week, month — you’ll be adding to a growing and growing user base thanks to your retention.

When retention is robust, you’re less reliant on an aggressive acquisition plan to grow. If we look at this from the lens of the bucket metaphor once more, imagine a bucket with no leak at all. Soon enough, you better find a larger bucket to contain the water you’re adding in at the top no matter how little you’re adding since the amount of water is only increasing.

Sure — growth initiatives around retention take longer to test. It’s more work. The impact can be more gradual. But if sustainable growth is your focus, you simply can’t solely focus on acquisition to the detriment of retention.

If we tie this all into a much more talked about concept in the startup world, retention plays a massive role in ‘product-market fit.’ Arguably the most important ingredient. You don’t achieve product-market fit without retention. And you won’t have a sustainable growth engine without retention either.

So let me ask you this: what are you doing around retention to increase growth?