How to effectively improve product user retention rate?

In the Internet age, users are crucial to products. All user-oriented products need to maintain user activity. Once user activity decreases, it means user departure or loss. As the cost of acquiring new users gradually increases, the cost of losing users also continues to rise. Based on this, " user retention rate" can be used as the most important criterion for judging the value of a product. Only when users are willing to stay can it be said that the product is valuable. So how do we improve user retention rate?

Discover: Find Your Product’s Magic Number

1. The concept of Magic Number

This concept is a case study of Facebook and Twitter in growth hacking, which analyzes the characteristics of active users. For example, Facebook found that users who added 7 friends within 10 days had a higher retention rate, and Twitter found that users who followed 30 influencers within 10 days had a higher retention rate. These indicator figures become the Magic Number of this company.

2. Magic Number Methodology

We all know that the core reason why users stay is whether the product function design can meet the core needs of customers.

If it can be met, can we go a step further and see if the design of our product can meet the core needs of customers better, faster and more conveniently? This is the second point.

So we need to understand what features new users have used, or what behaviors have occurred that made them stay. Furthermore, we need to know that certain behaviors and frequencies of users on the website/App in the early stage of their visit may make users stay and use it for a long time, becoming loyal users. By discovering these behaviors and their occurrences, optimizing the product, and encouraging users to use these features, it is possible to achieve higher retention rates.

We hope that new users can say "aha!" to our product as early as possible when using the App. We hope that they can quickly discover the value of the product and stay. So I hope to find the Magic Number of our APP. At this stage, we are most concerned about the initial retention of users, so we need to understand the relationship between the early stage of using the APP (what users do in the first week) and the retention in the second week, and find those behaviors with high retention.

A user uses certain functions of our website or APP, performs certain actions, and then stays to continue using our products and becomes a loyal user. This shows that there is some correlation between user behavior and retention rate. We need to find this correlation and then see if there is a causal relationship.

Therefore, the essence of Magic Number's methodology is to find the behavior that leads to the highest user retention rate through analysis . And by applying it to product design and operations, all new users can experience the product value as much as possible, so that they can stay longer.

For example, when we find that users whose first and second consumption are three days apart have the highest retention rate, we will use various operational strategies to guide and remind users to come back for consumption three days after their first consumption. For example, operational strategies such as setting validity periods for various coupons can be used to induce them to consume within 3 days.

3. Exploration and practice of Magic Number

To this end, we have done the following (taking e-commerce products as an example):

The first step is to identify possible behavioral indicators of users using the product (indicators that may affect retention rate).

An e-commerce app may have behaviors including logging in, browsing, adding attention, favorites, adding to shopping cart, liking, sharing, purchasing, etc., as well as behavioral indicators such as average order value, number of orders, and average order cycle.

The second step is to analyze the correlation between user behavior and final retention rate.

For example, the relationship between the number of orders and the retention rate is shown in the figure below. There is a certain correlation between the number of orders placed by users and the retention rate. As the number of orders placed by users increases, the user retention rate also gradually increases. When the user placed an order six times, the retention rate rose rapidly to 84.64%. After that, the rising speed gradually slowed down. When the user placed an order 10 times, the user retention rate reached 91.14%. At this time, the user retention rate basically stabilized. Therefore, when a user places orders 10 times or more, his stickiness is very strong and the probability of churn is very low. That is to say, in our actual operation work, we should try our best to guide users towards the goal of 10 orders. For example, setting up 10 incentives and so on. You can operate according to the actual situation.

The third step is to select the appropriate Magic Number.

Select the appropriate Magic Number based on the company's current development strategy, operating costs, feasibility, and A/B testing. If the current development strategy of this APP product is to quickly acquire new users and expand the market, then we can use "adding 7 new users within a week" as the final Magic Number.

The fourth step is to find the final Magic Number, and then we need to execute and operate it well.

For example, in this social APP, users are encouraged to add friends and friends are recommended to users more accurately. This will achieve the original goal, cultivate user product usage habits, increase user stickiness, and promote growth.

4. Conclusion and Recommendations

Once retention is improved, we can monetize users or spread recommendations, so that our user base will gradually increase. By continuously attracting new users to the market, the retained users will gradually settle down and become our important users, which can be monetized. As for those unstable users, we still need to make various product and operational improvements to gradually turn them into retained users and then start monetizing them.

Only when the user retention rate is improved can we truly achieve growth in active users.

Related reading:

1. App promotion: How to do user retention analysis? Make these two points clear!

2. How to activate existing users and improve user retention?

3. Data Operation: How to define “user retention” and “activity”?

4. The core methodology of user retention under refined operations!

5. How to improve user retention rate? 6 strategies used by the entire Internet finance industry

6. 5 common methods to improve user retention!

Author: Network

Source: Internet