How to retain new users?

Why did we lose the users we worked so hard to acquire? How to retain new users ? "Today, as the traffic dividend gradually fades, how to retain new users who have been acquired with great effort and time and make them active or even loyal users is extremely important for products. The author of this article shares specific methods for retaining new users. Let's take a look together.

Retention is a topic that Internet people can never avoid. Although concepts such as user growth and growth hacking have been extremely popular in recent years, people mistakenly believe that the continuous influx of new users is the key.

Little do people know that the growth here not only refers to the growth in the number of new users, but also the growth in the value of new users. It is easy to attract new users, but only when they stay can value be created.

1. What is retention?

In the Internet industry, users who start using an application within a certain period of time and continue to use the application after a period of time are considered retained users. The proportion of these users to the new users at that time is the retention rate, which is counted every 1 unit of time (for example, day, week, month).

Retention can be understood as a state in which users’ needs are met within the product and they actively stay and continue to use the product.

When users use a product, there is a certain life cycle. No product can keep users fresh and loyal forever.

Based on the user life cycle, users can be divided into the following three progressive stages:

• New user stage: users who use the product for the first time.
• Active user stage: users who have used the core functions of the product and experienced the core value of the product (the definition of active varies depending on the product type. For example, for e-commerce products, active users are defined as users who have placed orders; for Internet financial products, active users are defined as users who have bound their bank cards, etc.).
• Loyal user stage: users who highly recognize the value of the product, frequently use the product and actively endorse the product.

In the above user stratification model, users at different stages have different demands for products.

For example, a new user who has just downloaded Alipay may want to bind a bank card to facilitate shopping payments.

If an Alipay user frequently uses Alipay, his/her needs are no longer just payment. He/she wants to use Alipay to facilitate his/her life, such as paying for daily expenses, booking air tickets and hotels, and even has financial management and insurance needs, and wants to increase his/her wealth through stocks and funds.

Therefore, for users at different stages, the strategies to improve retention are different, which can be divided into improving new user retention and improving active user retention.

• Improving new user retention: This can be understood as shifting the user's life stage from new users to active users through product or operational strategies.
• Improving active user retention: This can be understood as shifting the user's life stage from active users to loyal users through product or operational strategies.

2. Why do users retain?

The world is bustling with people all for the sake of profit. The emergence of any product carries the mission of solving user pain points and meeting user needs. If a product is just a pseudo-demand imagined by the boss, no matter how awesome the product and operation are, there will be no solution. Users will only pay for products that meet their needs.

Taking into account the different needs of users at different life stages, we have divided the strategy for improving retention into improving new user retention and improving active user retention.

For new users, when they download and use the app, they come with clear expectations and core needs, and these needs are very direct.

For example, users download Meituan to order takeout and download Didi to take a taxi. If the product can quickly and directly meet the core needs of new users and meet their expectations, then users will stay and become active users.

For active users, their demands may be varied and complex. Some veteran users of some products, in addition to meeting their basic core needs, may hope that the products can provide richer and more surprising functions. For example, in addition to being used for daily payments, Alipay can also use idle funds for financial management. Wouldn’t users be excited about this?

Therefore, the strategy to improve new user retention is to meet users' core needs faster and more directly through product or operational strategies.

The strategy to improve active user retention is to more elegantly meet users' core needs and ever-changing new needs through product or operational strategies.

The core needs mentioned above are reflected at the product level in the "Aha moment" of German psychologist Karl Bühler, which we often refer to.

An Aha moment is a special, pleasurable experience in thinking during which a situation suddenly becomes more profound than it was before.

New user retention and active user retention are both big topics. Given the length of the article, this article only discusses how to improve new user retention. We can discuss active user retention in the next article, so stay tuned.

3. What are the key behaviors for retaining new users?

Every product has its core value. For new users, to experience the core value, they need to perform some key behaviors. Moreover, these key behaviors must be completed quickly and without obstacles. Only then can new users recognize the value of the product and retain it. However, the number of key behaviors that need to be completed varies for different types of products, and some may be experienced with just one completion.

For example, for e-commerce products, users only need to complete the order once, but some need to be completed multiple times. For example, on Tik Tok, you may have to watch several videos before you find that the recommendations are what you like to watch. Based on this, we can summarize the retention formula for new users:

Therefore, the key to improving new user retention lies in how to find this key behavior and determine the minimum number of times to complete it, which is often called the magic number. Of course, the more times the better, but it will also cause a great burden on users, so here we need to find the minimum number of key behaviors that can keep them retained.

The steps of key behaviors for new users are broken down as follows:

1. How to propose alternative behaviors?

(1) Qualitative analysis

Clarify the product's positioning, usage scenarios and core value. First, clarify what the core value of the product is?

On this basis, find out the behavior of new users who experience the core value most quickly when using the product. User research: By studying the results of different users, discover the core value of the product to users.

• Active users after registration: Why do they stay? What actions did you take as a new user and what were the key experiences?
• Users who leave quickly after registering: Why do they leave quickly? Does the product solve a pain point?

Long-term active users: Why do they find the product valuable?

(2) Quantitative analysis

Generally, we can conduct data analysis on the differentiated behaviors of retained users and churned users, and find out the core demands of users by analyzing the functional preferences and behavioral paths used by retained users and those of churned users.

2. How to identify key behaviors?

From the alternative behaviors, find the most relevant behavior. The following principles are used to judge the relevance:

• Principle 1: The higher the frequency of use, the sooner new users expect to gain value from the product. The frequency of use can be used to predict the decision-making period of new users.
• Principle 2: The shorter the life cycle, the sooner new users expect to get value from the product;
• Principle 3: Analyze the actual data of new users and look at the time window when most early activation behaviors occur, that is, determine the decision-making period of new users.

Based on these principles, judgment needs to be made:

(1) Determine the decision-making period of new users

Through the overall retention curve, we can find the retention inflection point. This inflection point is the decision-making period, which determines that the key behavior must occur within this period.

As shown in the figure below, the retention of new users has basically stabilized after 4 days, and a large amount of loss occurs within 4 days, so the key behavior must occur within 4 days of new user registration at the latest (the following data is only used for explanation and is not authentic).

(2) Find key behaviors

By comparing the retention curves, we can find the behavior that has the greatest impact on retention during the new user's decision-making period, whether the user performs or does not perform the alternative behavior. This behavior is the key behavior we are looking for.

As shown in the figure, for a certain short video product, after analysis, it was found that the retention rate of new users' alternative behavior of watching videos was significantly better than other behaviors, so the key behavior of new users is watching videos.

3. How to calculate the magic number?

Some key actions only need to be done once, such as completing an order, while some need to be done multiple times, such as Douyin. In theory, the more times, the better the retention, but it will put too much burden on users to complete, so we need to find the best number of times that can retain new users. To find the magic number, we can use the maximum marginal effect method:

1. Draw a distribution chart of the number of key behaviors of new users on the first day;
2. Analyze the relationship between the number of key behaviors on the first day and the retention rate on the second day;
3. Find the key number of behaviors corresponding to the point with the largest marginal benefit of retention, which is the magic number.

Taking the above short video APP as an example, the retention rate of key behaviors completed at different times is shown below. It can be found that with the increase in the number of video views, the retention of new users is significantly improved. However, when the number of views is greater than 5 times, the improvement in user retention is not very obvious and has reached the growth margin. Therefore, it can be determined that 5 is the magic number.

However, the magic number is not absolute. The magic number value is correlated but not causal. Similar behaviors may be counted in multiple ways. It only represents the statistical situation of most users and is the turning point for most users. Indicators can be further refined based on different user portraits to make them more accurate and targeted.

4. What are the obstacles for new users to complete key behaviors?

Now that we know the key behaviors that affect new user retention, how can we enable new users to complete this behavior faster and easier? Or what are the obstacles for new users to complete this behavior? Only by understanding these problems can we locate the crux of the problem and then prescribe the right remedy.

It is not easy for new users to complete the above key behaviors all at once, but they need to go through a series of processes, that is, the user's key behavior funnel. Only by locating the problem links of funnel loss can we make targeted improvements and optimizations to products and operations.

The analysis of key behavior funnels can also be broken down from two dimensions: qualitative analysis and quantitative analysis.

1. Quantitative analysis

First, based on a deep understanding of the business, we sort out the main processes for new users to complete key behaviors, which is the key behavior funnel.

Analyze the conversion rate of each process in the funnel and locate the nodes with serious loss.

Exploring the reasons for the loss of new users is the most critical and difficult, because the reasons that affect user loss are complicated and need to be explored from different angles. Generally speaking, it can be broken down through the following dimensions:

• Is the key behavior path for new users too long, resulting in users having to take many steps to experience the core value of the product?
• Is there a lack of user guidance when new users use the product, which makes it difficult for new users to cold start and give up?

Different types of users may have different churn, so it is necessary to group users. What are the differences in the function usage of different types of users? The dimensions of grouping can be:

• Demographics such as age, gender, region, etc.
• Have you communicated with customer service?
• Is there any social interaction?
• Is there any red envelope coupon pull
• Customer acquisition channels

2. Qualitative analysis

You can also use survey questionnaires to analyze why users leave. Which part of the experience was bad? Is it a product problem or insufficient operational involvement? Is it that the product functions cannot meet the needs or that the user experience is poor?

5. How to improve new user retention?

We have previously analyzed the key behaviors that affect new user retention and the user funnel in achieving this key behavior, and learned at which stage new users are most likely to churn.

After knowing all of this, we can formulate targeted plans to improve the retention of new users. We can start by increasing motivation, reducing resistance, increasing users' sunk costs, and providing irregular rewards.

1. Increase power

Through endorsements from friends, or by providing personalized services, or by putting the core value of the product in front of users so that they can feel it in advance, high-quality content and high-quality experience can be provided, and a user incentive system can be established.

2. Reduce resistance

Reduce all redundant steps that prolong user activation time, such as avoiding unnecessary information entry, postponing registration or even waiving registration, avoiding user cold starts, providing appropriate user guidance, highlighting key paths and key functions, etc.

3. Irregular rewards and boosts

Operations should intervene in a timely manner. If the activation time of new users is short, it is necessary to intervene quickly during the decision-making hesitation period, and use operations means to quickly understand the product functions and enable users to activate and retain.

For example, you can use off-site channels such as push, SMS, email, and official accounts, or you can use on-site channels such as in-site information and resource promotion to reach users in a timely manner, and use new user red envelopes to attract new users to activate their behavior.

4. Continuous user operation system

We call irrecoverable expenditures such as time, money, energy, and emotions sunk costs.

The time, energy, money and emotions that users invest in the platform will encourage them to stay on the platform.

Different from the short-term and quick boost of irregular rewards, we can use the user operation system to let new users continue to spend more time and energy on the product, thereby increasing the sunk costs of new users.

VI. Conclusion

Here we mainly discussed how to improve the retention of new users, and mainly tried to carry out the following ideas:

1. What is new user retention?
2. Why do new users stay?
3. What are the key behaviors that influence new user retention?
4. What is preventing new users from completing key behaviors?
5. How to improve new user retention by focusing on problem areas?

As the Internet's demographic dividend gradually fades and customer acquisition costs continue to rise, it is not easy to acquire new users. How to make users who have been acquired with money feel the value of the product more quickly, use the product more frequently and longer, and extend the life cycle of new users is a headache for every product and operation, but also a rewarding one.

Enjoy the journey, the future is long, keep moving forward.

Author: Big Data Analysis and Operation Knowledge Planet Source: Big Data Analysis and Operation Knowledge Planet