1. Understanding Retention
What is retention ?
Retention in a consumer product denotes the proportion of users who remain actively engaged with the product over a specific timeframe following their initial registration. The concept of “active” involvement encompasses a range of user behaviors, including messaging, regular logins, completing purchases, or any other substantial interactions that showcase continued interest in and interaction with the product. Retention serves as a pivotal metric for evaluating the product’s capacity to sustain user enthusiasm and contentment beyond the initial onboarding stage.
Why is so important?
Retention is the cornerstone of business success, distinguishing the top 1% of companies from the rest.
Retention fuels monetization, acquisition, and virality cycles. The longer you keep a user engaged, the more opportunities there are for monetization touchpoints to arise.
Understanding Retention
Retention is typically visualized through Retention Curves, which illustrate the percentage of users returning to the product over time.
Declining: Occurs when a product lacks product-market fit. The retention curve exhibits a continuous decline, ultimately leading to very few or even no active users. In such a scenario, it becomes crucial to pivot the product towards identifying a compelling value proposition for a core user group and then progressively expand from that foundation.
Flattening: A portion of users who initially experimented with the product discovered its value and consistently returned over time. Nevertheless, it’s important to note that not all flattened curves are created equal. The higher the plateau at which the curve levels off, the stronger the long-term retention and the healthier the product. It’s imperative to have a deep understanding of the specific user demographic that comprises this returning group.
Smiling: In the realm of truly exceptional products, your retention curve can actually rise over time as product development and network effects entice disengaged users to re-engage. Possessing a retention curve that follows this pattern is akin to discovering a valuable treasure.
Why is retention hard?
- Retaining users in your product is an increasingly demanding task. Expectations regarding user experience, design, and functionality have risen to such heights that even a single error or confusing element can lead users to abandon the product forever.
- In today’s world, we are bombarded with a constant stream of thousands of stimuli each day, making it challenging to capture and maintain a user’s attention until they naturally form a habit with your product.
- The barrier to entry for creating a product and replicating a successful one is progressively lowering. If your product is delivering results and drawing imitators, it becomes imperative to fortify your defenses against competition.
Benchmark of retention
When assessing your product’s retention against benchmarks, it’s crucial to possess a deep understanding of the specific market you operate in and the corresponding user behavior within that market. Competitive benchmarking should also be a top priority, helping you gain valuable insights and insights into your product’s performance.
