The most complete guide to improving user retention!

How to improve user retention?

1. The value of user retention

This article explains the practical methods of how to improve user retention.

First, let’s take a look at how important user retention is. What does it really mean to improve user retention?

Harvard Business Review studied the value of user retention and found that:

Harvard Business Review

• 70% of companies agree that it is cheaper to retain existing users than to reacquire them.

• The CAC cost of acquiring a new user is more than 5 times more expensive than retaining an old user.

• Improve user retention rate and increase product profits by 25-125%

Let’s take a look at the average user retention rate of App applications on the market.

Average retention rates for iOS and Android

• The average user’s first-day (Day 1) retention rate is around 25%;
• The average user's 7-day retention rate (Day7) is around 12%;
• The average user's 30-day retention rate (Day30) is around 7%;

It is not difficult to find that the current user retention situation is very severe. So if you don’t do a good job of retaining users and instead continue to invest a large amount of marketing budget to acquire customers, then you are actually just renting traffic.

2. Three stages of user retention

Through retention analysis, we can make a simplified evolution of the relationship. We divide the entire user retention cycle into three stages: initial stage, mid-term stage and long-term stage, as shown below:

The three stages of user retention

If we want to improve the user retention rate of our product, we need to be very clear about who the users are at each retention stage and what their characteristics are.

The three stages of the user retention cycle actually represent three types of users:

• The initial stage corresponds to new users. What you need to do for users at this stage is to guide them, make them familiar with your product functions, and convey your product value.

• The users in the mid-term stage have been around for a while and are familiar with your product. At this stage, you need to make them more engaged and active, and cultivate their loyalty.

• The later stage corresponds to loyal advanced users. If the first two retention stages are mainly focused on product guidance, user experience and behavioral psychology.

The goal of this final stage is to eventually build an excellent product and continuously improve it, and it is important to get these loyal advanced users involved.

3. How to improve retention rate at different retention stages

All retention stages are important, but they are not all the same.

Let’s look at the three stages of the user retention cycle and see how to improve the retention rate in a targeted manner.

Phase 1: Initial Retention

Early stage of user retention

In my opinion, the initial retention stage is the most critical.

How you attract users in the initial stages has a much greater impact on overall retention than any other factor - if you fail in the first retention stage, there is little you can do to make up for it in the subsequent retention stages.

What makes the initial retention phase so important? In short, it’s the user’s first impression of your product and brand. Let’s analyze the User Experience Journey map.

User Journey-A&B

• Route 1: User registration—experience core functions—aha moment—user retention

• Route 2: Don’t want to register—try for a few minutes—get bored—uninstall—user churn

Ideally, you want new users to engage with the core features and understand the usefulness of your product as quickly as possible, so how can you increase the likelihood of retaining users in the initial phase?

You need to guide users, familiarize them with your product features, and convey your product value.

Method 1: Onboarding

In the article “Step-by-Step Growth Hacker Guide: How to Increase Registration Conversion and User Activation”, we mentioned the importance of Onboarding.

So how should an excellent onboarding guide for new users be reflected in product form?

(1) Deliver product value through the product launch page

TikTok App

Tik Tok is a popular original short video sharing platform in China. The five guide pictures on the startup page convey the product's functions and values ​​to users from five aspects: shooting, hot searches, positioning, and props.

Be careful to be brief and concise when describing your product’s features and value, so that users can get into your product as quickly as possible.

(2) Reduce user operation costs by decomposing tasks

Facebook personal information complete

If your product’s activation events are difficult or time-consuming, break the task down into multiple steps. It’s easier to ask users to complete small things at a time than to make a huge commitment. No user likes to fill out a bunch of forms.

You can break down a complex task (such as completing personal information) into logical parts, which can reduce the user's operating costs and at least prevent the user from feeling intimidated.

Facebook has been constantly experimenting and optimizing the way users complete their personal information. In the past, setting up your personal information was a minefield, and many apps tried to avoid making any changes to it.

However, by breaking these settings down into logical pieces, Facebook is increasing the number of people who use the feature to set their personal information - rather than desperately abandoning the needs of these people.

( 3) Use the Progress bar

Quora progress bar

Using a progress bar to motivate users is an easy way to let users know how much progress they have made and how much unfinished tasks they have left.

Users celebrate the progress they’ve made and it provides a sense of ease for the rest of the activation process.

Quora’s Onboarding guide uses a progress bar to keep users engaged and focused enough to complete their account setup.

Method 2: Personalized product preferences

Personalized preference selection for various apps

Let users choose according to their interests and then provide some personalized content.

The first is to at least ensure that the content you recommend to users is of personal interest to them.

All content or social products must pay attention to user interests and preferences. The content you recommend or push to users in the early stages is based on the interest tags that users choose independently.

As for whether you can achieve the same level as Toutiao in the future, distributing content through algorithm recommendations and tailoring it to each individual, it is based on the number of your users as well as their behavioral habits and reading habits.

Method 3: Help users find the Aha Moment as soon as possible

Aha Moment for each product

The AHA moment is the core functionality and value of your product, and it should make users’ eyes light up. In other words, users come to your website or download your app because of the core value of your product.

If you can allow a user to experience the aha moment of your product, then this user is likely to become a super user and ambassador of your product.

So is there a formula for the aha moment? There are: (who) completes (what behavior) (how many times) in (how long).

Take TikTok as an example. In the Onboarding Pages above, there are 5 product guide pages, each of which has 5 main functions. The text is very concise and is intuitively expressed with pictures. The purpose is to help users enter the product for the first time and experience the Aha Moment.

Users can choose music through Douyin and shoot 15-second music short videos to create their own works.

When users open TikTok, they find that they can easily shoot short videos without any shooting and production costs. The content is interesting and contagious, and they can express themselves.

That’s when he had this pleasant surprise, and that was his AHA moment.

Why find the Aha moment? There are three reasons for this:

• This can help you find retention patterns for your users, which will tell you which behaviors lead to user retention.

• Guide activation and retention experiments: because this is a leading indicator.

• Help the team find clear focus.

Method 4: Push notifications/email marketing, etc.

Message Push

I have always felt that push notifications and email marketing are good precision marketing methods.

• Activate new users: Participation strategies can be in the form of discount codes, coupons, red envelopes, etc., to encourage them to explore your products or even purchase them.

• Encourage first-time purchases: Engagement strategies can send personalized recommendations or discounts based on the user’s product/content browsing history.

Phase 2: Mid-term retention

Mid-term user retention

The mid-term stage of user retention is to allow users to form new habits. No matter how excited and curious users are when they use the product for the first time, this novelty will disappear after a period of time.

Many products believe that the successful Aha Moment in the first stage can keep old users, but unfortunately, a single good experience does not create new habits.

Therefore, you need to use different marketing strategies to increase user stickiness, such as check-in functions, regular activities, etc.

Keep users engaged, and also think about how to create more aha moments.

In the mid-term retention stage, there are four main methods to cultivate user stickiness and loyalty:

Method 1: Introducing marketing activities with incentive mechanisms

Various marketing activities that introduce incentive mechanisms

You can use incentives to get your existing loyal users to recommend your product to nearby users. You can quickly expand your user base and provide incentives to potential users as well.

Additionally, the cost per customer acquisition from user referrals is usually much lower than the cost of acquiring customers from other channels, and the retention rate of referred users is usually higher.

Therefore, all kinds of marketing activities that introduce incentive mechanisms are of great significance both for attracting new users and improving user retention rates.

Method 2: Loyalty programs (check-in, points, clock-in, etc.)

Loyalty programs in the form of sign-in/punch card/points, etc.

Loyalty programs can play a significant role in the user's life cycle retention stage. If the emotional needs of users can be met, such as making them feel a sense of accomplishment, then users will also take the initiative to share or influence the people around them.

According to a study conducted by Nielsen, 92% of people trust recommendations from friends.

Method 3: Engagement loop, reactivation (Email/Notification)

The engagement loop uses external triggers, such as emails, push notifications, and text messages, to recall users. When is it appropriate to recall or reactivate a user?

Here are a few examples - you can automatically recall users by email or SMS within 7, 14, or 30 days after they churn;

You can also use user intelligent reach to send various coupons, red envelopes and other notification reminders to potential or historical users on the eve of corporate events such as 618 and Double Eleven, so as to improve user retention, reduce user churn and promote user activity.

Method 4: Keep communicating with users and continue to serve them

Building relationships with loyal users is equally important. Show appreciation for their business, treat them well, and nurture that connection.

Let old users give more opinions and suggestions. You can choose not to adopt their opinions or suggestions, but customers will feel cared for.

For example, many of our products have WeChat communities, but now WeChat communities are almost flooded with advertisements, so why not change the idea and think about how to operate the community in a refined way?

You might as well try to output some professional content for your users, whether it is articles, videos, industry research, industry solutions, etc.

Stage 3: Late Retention

Smile retention curve

If the first two retention stages are mainly about product guidance, user experience, and behavioral psychology, then the goals of the last retention stage are two:

Build a really great product and keep improving it. For example, in the past few years, the photo editing/short video industry has been very popular, and Zuji, Meitu, and Miaopai were once very popular.

However, in this industry, without innovation, it means decline. With the rise of Kuaishou and Douyin, the landscape of the short video industry has been rewritten.

Therefore, how to apply new ideas and innovations to products is the key to maintaining long-term competitiveness of products.

Build products with loyal users. These loyal users persist in the last stage. They can get a consistent sense of value from your product. They have persisted for many years and must have a lot to say about your product.

So you can let them participate in your product construction. For example, you can ask for their opinions on the product function iteration.

They can join the "Beta Program" to try out new features in advance; you can invite them to help you promote your product on various social channels/Q&A communities...

Your ultimate goal is to make the retention curve, which has been declining, rise steadily and draw a "smiling retention curve."

Author: RD has something to say

Source: RD has something to say