HTSAS Lecture 6

Alex seemed to have glossed over why the retention rate should never reach zero for a business, so I wanted to provide my own explanation of why he is right (disclaimer: these are only my opinions).

Simply put, getting a lot of publicity on your product (typically through Hacker News, Product Hunt, Designer News, Tech Crunch, etc.) certainly creates a lot of traffic in a very small amount of time. However, if these users are not retained, the number of users would simply be back to what it was before. There would be no word of mouth spreading, and fewer users would feel compelled to spend any money on the product.

The very definition of not retaining users implies that they don’t use your product or service again, so you would have to constantly get new, distinct users to maintain growth. Thus, it’s fairly interesting to think about the fact that within every market segment, the users you are really aiming for are the early adopters, and there are only so many of them. And there are also only so many big publicity outlets like Hacker News, so in the end, the only sustainable way to have users is to retain the ones you get because your marginal growth will decrease very quickly.

In the next lecture, Kevin talks about how it is much cheaper to reduce churn, which is just another way of saying increasing retention.