Thousand-word summary of the AARRR model’s retention methodology

Today we will continue with the user growth and retention part.

AARRR Model Retention

Retention-related concepts

1. Retention

Refers to users continuously completing key behaviors: 1) User retention must be linked to key behaviors; 2) If retained users do not complete key behaviors, they are likely to leave the product after the free trial period ends

2. Retention rate

Refers to the percentage of users who have completed a key action in the product (just once) after a certain period of time.

3. Frequency of retention

Find a longer period of time (such as 60 days), find a group of users who have performed key actions at least twice, and see the time interval between the two key actions of most users.

For example, in a fitness app, data analysis shows that more than 80% of users have a 7-day interval between workouts. So the retention frequency of this product is one week.

4. User Engagement

How many key behaviors do users have on average in a certain period of time and what percentage of users have more than one key behavior at the same time

User segmentation by engagement

1) Passive users

These users do not use the product correctly, but continue to use the product in their own way with a relatively normal frequency.

2) Core users

These users use the product correctly at a relatively normal frequency.

3) Super User

These users not only use the product frequently, but also use many functions at the same time and discover the advanced functions of the product

User engagement ladder migration

Figure: User engagement ladder

Retention-Engagement Product Matrix

Why should we care about retention?

1. Make growth sustainable

Net user growth = New users joining – Old users leaving

Data shows that the 50-day retention rate of the top 10 apps in the app store is above 50%, while the average for all apps is less than 5%.

2. Aspects that affect operations

1) Extend the user payment cycle and increase the user lifetime value (LTV)

2) Give the team the budget to test more and more expensive growth channels

3) Bring in more loyal old users and increase the recommendation rate

Strategies to improve retention

1. New user activation stage

How to “enable users to quickly complete key behaviors”

1) The greater the value users get from the product, the higher the retention rate

2) Continuously optimize new user experience to enable users to quickly complete key behaviors

3) Use triggers to reinforce users’ understanding of product value

2. Mid-term retention stage

The method of "making users familiar with the product, discovering more value, and forming usage habits"

1) Provide users with a variety of rewards to encourage them to get rewards through actions. The more actions they take, the greater the rewards.

• Provide a "reward" for a user's single behavior, and this reward is not fixed, it is different each time, so that users look forward to the next time
• Combining practical rewards with experiential social rewards

• Actual returns: making money, saving money
• Experiential social rewards: membership upgrades, superior product experiences (VIP lounges, priority check-in);
• Common methods: ① Recognize user achievements - recognition emails/medals; ② Personalized customer relationships - personalized triggers (rewards) & emails/letters/products with personal names/personalized product recommendations

2) Require users to invest a little effort in the product, and this little effort can increase the value of the user in the product

3) Help users form usage habits by adjusting the number, method, frequency and content of triggers

Actual Cases

• Push reminders to Xiao Wang at 8 o'clock every morning. Xiao Wang sees the reminder and starts to write a plan using the product
• Next time when Xiao Wang receives a reminder, he will be more likely to continue opening the product and writing a plan
• After enough times, even if there is no push notification, Xiao Wang will think of writing a plan on his own.

4) Increase the number of different product features used by the same user

5. Create a closed loop of engagement

1) A virtuous cycle that can amplify "behavior", so that one user's behavior leads to multiple behaviors

2) From the product perspective, we need to find effective “hooks” that effectively trigger users to complete actions

3) From the user's perspective, the product design should be consistent with the user's intrinsic motivation, and feedback and rewards should be given after the user takes action to motivate the user to take action next time.

4) Basic components of the closed loop

5) Two examples of closed-loop participation

• Single player mode

• The user's behavior can drive his next action
• For example: customer loyalty program
• Facebook Single Closed Loop

• Multiplayer

• The behavior of one user can drive the behavior of other users
• LinkedIn Multi-person Closed Loop

3. Long-term retention stage

How to keep users coming back and avoid churn

1) Let users constantly realize the indispensability of the product

2) Continuously improve products and upgrade functions

3) Products bring greater value to users

4) Regularly launch new features

• Continuous user onboarding

• Help users experience core functions that they have not yet experienced
• Help users experience new features

• Control the pace of new releases

• Notifying users in advance that new products are about to be launched and informing them of the new value they will bring will help improve user retention.
• For example, the semi-annual new product launch

5) Allow users to use multiple clients

Data shows that such users retain more, especially when the mainstream client changes.

6) Continuously adjust the content and method of information delivery

7) Provide rewards for repeated use

4. Lost User Stage

The method of "recalling lost users and making them rediscover the value of the product"

1) Investigate the reasons for churn through interviews

2) Improve your product

Characteristics of three user communication channels

• Notes on mobile push testing

1) Monitor negative impacts, such as the rate at which users cancel push permissions and the rate at which apps are uninstalled

2) Control the overall impact by testing on a small percentage of users

3) Use vibration only in the most urgent situations

4) Consider the user’s daily routine when planning mobile push notifications

5) Use a variety of personalized language in your copy

6) Use deep links to allow users to directly reach the specified page in the app

7) Continuous testing and continuous optimization

• Mobile Push Solution Andy Carvell's RRF Model

1) Reach

Wide coverage: determined by triggering scenarios and suitable user groups

2) Relevance

High relevance: determined by timeliness and personalization of content

3) Frequency

High frequency: determined by the frequency of triggering scenarios

• Information that is suitable for inclusion in products

1) Promote new features, new content or improve the practicality of existing features

2) Time-sensitive information

3) Provide information to users, interact and communicate with them

• Market average of push click-through rate

Top 10 reasons why users may churn

1. Competitive products appear on the market

2. Competitors launch new features and new campaigns, snatching away users

3. The company did not use the best communication method to communicate with users, such as not conveying the correct information and not grasping the frequency

4. Failure to seize opportunities to build user loyalty and develop regular user habits

5. Not making users feel that they are valued and understood

6. The products or services provided by the company can no longer meet the new urgent needs of users

7. Users have found a more convenient and satisfying way to meet their needs

8. A new round of advertising attracted a large number of new users, but the product was not suitable for these users

9. After offering a large advertising discount, a large number of new users quickly abandon the product after the price returns to normal

10. The product cannot 100% meet the needs of new users brought by new channels.

How to perform data analysis on retention curve?

1. Draw a user retention curve

Step 1: List the key behaviors

• For e-commerce products, key behaviors mean that users eventually become paying users.
• For community products, key behavior means users become content contributors.
• For mutual finance products, key behavior means continuous investors.
• For content products, key behavior means that users become content payers.

Step 2: Discover the Natural Use Cycle

Using industry benchmarks and user behavior data, we found that most users have a certain interval between two key behaviors.

Step 3: Record the number of first-time activated users N in each cycle

How many people completed the key behavior for the first time during each period, such as each week or month

Step 4: Track the number of key behaviors that users continue to complete M

How many first-time activated users continue to complete key behaviors in each subsequent cycle

Step 5: Calculate the retention percentage per cycle

Calculate the ratio of users with key behaviors to the number of activated users in the first week (M/N)

Step 6: Draw the retention curve

Plotting the retention percentage over time

2. How to judge whether the retention curve is good or bad?

1. Understand the industry retention rate and competitor retention rate

2. Observe the retention curve of the same group horizontally: a good retention curve should become flatter and flatter

3. Compare the retention curves of people in different dimensions vertically

• Grouping Dimensions

• Traffic sources
• User characteristics
• Different behaviors

• Understanding what active users do in the product helps understand what value they get from the product
• For example: Youtube understands the different factors that drive user retention based on user behavior

① Video viewers: the vast majority, with large fluctuations in retention rate, and the product value is the videos they like.

② Video commenters: fewer, higher engagement, higher retention rate, product value is video quality, interaction with others

③ Video creators: very few, with extremely high retention rate, and product value is fans and income

Author: Zexue Notes V

Source: Zexue Notes V