5 sets of data and 2 dimensions explain to you why retention is king?

We imagine the most common scenario, when an application or website is launched, everyone will probably focus on attracting new users and increasing activity. Maybe in the first few months our KPI will be how many new and active users we achieve. The company’s external public relations releases will also focus on promoting indicators such as downloads and number of users.

We do this because of human nature, because we are lazy and most of us will choose the easiest path.

It is relatively easy to attract new customers and activate new users at the beginning, and isn’t this the growth we are pursuing? Why not? Besides, doing a good job of retention requires considering all aspects of product-market fit, which is relatively more difficult.

But is this really right? You try your best to acquire users and increase activity through various means, but once you ignore retention, everything you do will be in vain. Customers come in through A and leave through B, with such a high loss rate, you will find that your reputation is gone, and each new channel you use will be one less.

Rapid growth and rapid loss of users is not a sustainable growth method at all; retention is. If your product can maintain high retention over time, then it means that there is product-market fit, which is what you want to achieve no matter what.

Without retention, the funnel may be a "leak"

Let’s look at the pirate model. The picture below best reflects the importance of retention. Many people talk about the pirate model, but few emphasize the importance of retention.

Retention is the key link in the conversion funnel. One end is connected to attracting new users and activation, which retain users, while the other end is connected to conversion and word of mouth, so that users who truly retain users can be better converted and spread. So we say that retention is a mentality of continuous growth. Only when retention is done well will the funnel not become a "leak".

5 sets of data - Why retention is king

The following 5 sets of data will illustrate why we should consider retention more important.

1.10% of users continue to use the app one week after downloading it, but only 2.3% after one month.

Not only do users churn, they churn quickly. This means that an application that wants to survive for a long time must prioritize retention. If you fail to actively engage users and earn their loyalty within their first week, your chances of success in the next 30 days are greatly reduced.

2.52% of apps lose at least half of their heavy users after three months

Even with a solid user base, you need strategies in place to retain them. An effective retention strategy is a marathon, not a sprint. What attracts users in the beginning is often not the real reason why they stay. To address this, your retention strategy needs to continually adapt to user feedback and their evolving needs and demands. Or better yet, consider being proactive rather than reactive.

3. It costs 5 times more to acquire a new user than to retain an existing one

From a cost-effectiveness perspective, the importance of retention is self-evident.

4. Existing users are 50% more likely to try new features and spend 31% more than new users

Your existing users are the most likely to engage with your features and products, and they are more likely to buy from you again. Therefore, maintaining existing users is not only more cost-effective, but existing users are also more valuable in the long run.

5. Gartner predicts that 80% of your company’s future revenue will come from 20% of your existing users

This is another manifestation of the 80/20 rule. Therefore, it is wise to allocate 80% of your energy to retaining existing users and 20% to acquiring new users. From this perspective, acquiring new users and retaining old users should be a collaborative relationship rather than a competitive one.

Facebook also places great importance on retention: retention comes first, followed by user growth. When the product has not found product/market fit, there is no room for growth. This is in line with our mindset of making a minimum viable product first.

2 dimensions - the core that drives product growth

There are two main points to retention: keep the users who stay and bring back the users who leave.

But if the user rarely interacts with your product, then even if you pull him back, he will leave sooner or later. The user installs the app for the first time, then forgets about it, and then you "wake up" the user with an email or push message. Oh, the user opens it again, finds your app annoying, and downloads it. In fact, the problem in this process is that users do not interact with you and have no sense of participation. At this time, your application is dispensable to users.

So what is driving product growth? To answer this, we introduce the “ Retention x Participation Matrix ”. In this matrix, we divide products into four categories: addictive, useful, disposable, and trendy.

We call applications with high retention and high user engagement addictive applications. The opposite is disposable applications, which you never really interact with. When you open your phone, you will find that there are many applications that you have never used, but you installed them for some reason, but they never demonstrate their value. Apps like weather or calendar are the “utility apps” in this matrix. You use them frequently but don’t engage with them because they don’t pique your interest. We call a small game or an application like Faceu that suddenly becomes popular a "popular application", but you will only be interested in it for three minutes.

Therefore, we should try our best to maximize retention and user engagement to drive long-term growth of the product.

Summarize

From a longer-term perspective, entrepreneurship is a marathon, unless your company is intended to survive for just one or two years. Over the past period of time, we have heard a lot about pigs in the wind and speed is of the essence, but I think we have not really understood the meaning of these words. Pigs without wings will fall to death, and soldiers without enough food and fodder will starve to death. The significance of talking about retention is that before you are ready to take off and spend your budget on the market, retention will be a key indicator to verify Product/Market Fit. Focus on retention first, then growth.

Mobile application product promotion service: APP promotion service Qinggua Media advertising

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