How to Systematically Improve your User Retention

Why is retention so important to your business?

Twitter’s Q/Q MAU, Credit Statistica

Understand your user retention

An example new user retention cohort graph
  1. Indication of a long-term retentive product. If your retention curve ultimately flattens out like in the graph above, this is a strong indicator that you have a long-term retentive product. However, if it trends towards zero or even if it flattens out fairly close to zero, you’ll need to improve your core product ASAP. You can’t build a sustainable business without a healthy percentage of your users retaining long-term, since eventually you’ll run out of users using your service.
  2. Changes in retention over time. In the graph above, it shows that the newer cohort in blue is retaining worse than the earlier cohort in red. You should be understanding how your retention changes over time and be concerned if fewer users retain over time. This is another way your user retention could trend to zero. Many times this could happen due to a new mix of users you’re acquiring, in that case you should be evolving your new user experience accordingly.
  3. Your window of opportunity. The graph above shows that 50% of new users don’t return after the first week. This is a strong indicator to focus even more on improving your initial onboarding and first-use of your product. Of course every product will retain differently, but it’s very common to see that the window to retain a user degrades over time, which is why it’s so important to deliver core product value as soon as possible.

Learn from your retained users

Talk to your users

Analyze your retained users’ journey through data

  1. Identify a set of core actions, specifically actions that would indicate that a user understands and gets value out of the product, these correlate well to long-term retention. For Pinterest, this could be viewing pages of Pins, clicking into Pins, saving Pins, creating Boards, etc. I recommend starting simple with a few key actions.
  2. For a cohort of users (e.g new users over a given week) calculate the percentage of users that engage with each action. Think of this as a step in a user’s journey towards retention. (i.e saved 0 Pins, saved 1 Pin, saved > 1 Pin, etc)
  3. For each of these steps, compute the percentage of users that retain. Here’s a graph of what that might look like for a single action, where the bubble sizes represents the percentage of users reaching each step.
This is fake data, it doesn’t represent actual engagement on Pinterest

Rapidly learn, iterate and improve

  1. Identify a set of leading indicators, specifically actions early in a user’s journey indicating that a user retained value out of the product. For example, say you’re trying to improve the first session experience, consider a metric like performed [action] in next session rather than performed [action] in first session. It’s still an early enough action and it better indicates that a product improvement led to retained value.
  2. For each potential leading indicator, take a cohort of users and compute:
  • Coverage, the percentage of users that perform the action.
  • Precision, the percentage of users performing the action that actually retain.
  • Recall, the percentage of retained users that actually performed the action.
Leading indicators charted by coverage, precision, recall and F1 Score
  • It has high coverage which allows you to obtain more users in your experiments, which is crucial to enabling faster ship or shutdown decisions. Indicator #1 is the most accurate leading indicator, but it will take 7x longer to accrue the same number of users in a given experiment.
  • It has a relatively high average of precision and recall (i.e F1 Score).
  • Although the F1 Score is the same as Indicator #3, it has higher precision which is more important for a leading indicator since you’ll be optimizing your product to get more users to perform the action.

In Closing

  1. Understand how your users retain on your product by defining and charting user retention over time.
  2. Figure out how to improve your retention by learning from your users through user research and behavioral data.
  3. Rapidly experiment, learn and iterate by investing in leading indicators that predict long-term retention.

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Founder MakersPlace, Growth Advisor. Previously: Growth @ Pinterest, Founder @ Foodoro(YC '09)

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Dannie Chu

Dannie Chu

Founder MakersPlace, Growth Advisor. Previously: Growth @ Pinterest, Founder @ Foodoro(YC '09)

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