5 ms·

Retention is King

96 points by jamiequint 12y ago

webwright 12y ago
My favorite thing about retention is the leverage it gives you. My favorite analogy is the "leaky bucket": You have bucket with holes in it. It's not holding water. You can pour water in as fast as you can and you might be able to get growth... But as soon as you stop, the bucket begins to leak out. Or you can plug holes. Make users happier. Work on re-activation. Give value. If you work on top-of-the-funnel stuff (more water) FIRST and then try to solve retention second, there's a lot of waste. You've leaked users. You've created a group of folks who don't talk enthusiastically about your product. If you work on retention first, all subsequent marketing efforts are more powerful. Word of mouth is more powerful.
- WadeF 12y ago
  The caveat is that you do need to work on top-of-the-funnel up to a certain point or else you won't have any users to retain or you won't be able to measure the results of your retention efforts.
  - medius 12y ago
    Yup, need to pour enough water to find out all those leaks.
- Gustomaximus 12y ago
  It needs balance. I've worked on products where ~90% of marketing resource is on retention vs. acquisition and they were getting outgrown by poorer products. And if you focus too much on what customers want to can limit opening your product to where the new users will come from. Or simply, customers never hear of your great product. With mass market products people often use whats put in front of them. My experience (as a marketer) is companies tend to swing hard towards one philosophy. I'm yet to work with a company that treats each equally allocating resource between them on ROI vs. a general prefered philosophy.
fragsworth 12y ago
> Do not focus on improving virality unless your overall retention is stable The same logic applies to monetization as well - there's (usually) no sense trying to improve your monetization if your retention sucks.
johnrob 12y ago
This sounds like a fancy way of saying focus on the product first. All the tricks in the world can only last so long if the product isn't a winner. On the flip side, if you have (and can maintain) the best product then it's only a matter of time until the world figures it out (except in a few winner-take-all-markets like online auctions). EDIT: PG has also nailed this concept, with his "well" analogy in http://www.paulgraham.com/startupideas.html http://www.paulgraham.com/startupideas.html.
electic 12y ago
Love the way as you read the article you see this big modal slide down in front of your face and you have to figure out how to get rid of it. There is a tasteful way to do this and this is not one of them. Retention fail.
- jamiequint 12y ago
  Hey, not sure what modal you're talking about (afaik I don't have one anywhere) can you specify?
  - look_lookatme 12y ago
    Here is what popped up as I was scrolling through the post (zoomed) on my phone: http://i.imgur.com/gSUNzUU.png http://i.imgur.com/gSUNzUU.png Here's what it looks like zoomed out: http://i.imgur.com/mTPE6uH.png http://i.imgur.com/mTPE6uH.png Didn't really bother me as much as the parent though.
    - jamiequint 12y ago
      Oh weird, I'll let Andrew know that it would probably be best to turn that off on mobile. Thanks.
      - ColinWright 12y ago
        No, just turn it off, period. If I want to subscribe I'll find the link. If I'm marginal, the modal will make sure I never come back.
        jamiequint 12y ago
        That is simply wrong, the modal will increase email acquisition which will increase retention every time. The HN crowd always hates this but its true.
        12y ago
beat 12y ago
Tom Tunguz wrote my favorite article on churn. If you're interested in the subject of retention, read this and get where he's coming from with the numbers. He's a quant guru! http://tomtunguz.com/churn-fallacies/ http://tomtunguz.com/churn-fallacies/
Finbarr 12y ago
This is an excellent post. Have definitely learned some of these lessons the hard way recently. This line particularly resonated with me: "If you have high retention and no virality you will sustainably grow your user-base over time. If you have high virality and no retention you will not."
- karenxcheng 12y ago
  "Do not focus on improving virality unless your overall retention is stable, not continuing decrease after some reasonable period of time." We definitely could have used this a few months ago
- sbov 12y ago
  You can still make a lot of money off high virality and no retention. You just have to recognize it for what it is: a cash grab rather than a sustainable business.
  - shanghaiseo 12y ago
    My thoughts exactly as I read the article. Some purposefully push retention to the side, looking to make the money big and fast rather than sustainable customer group.
mrweasel 12y ago
I'm starting to question the value of the strive towards increased retention, at least for the industry I work in. My employer is a rather successful webshop and as anyone else in the same business we hire in loads of third parties to help increase visibility, conversion and retention. An article, which I sadly can't find again, had a quote from a customer that really made me think about this. The article was regarding not requiring users to signup before buying a product and the quote was something like "I'm not look for relationship with your site, I just want to buy something". For us, the customers that have a "relationship" with us is the first bunch of people I would drop, given the chance. They are the ones taxing customer service the most, they have the most complicate wished and while they might be your ambassadors, they will also stab you in the back. For companies that ships actual goods, retention is not worth wasting money on. It's better to try to reduce your prices and cost. Be extremely visible on search engines and price comparison site and treat every customer as a new customer. If someone shopped with you before and had a positive experience they might choose you over a similar prices competitor, but price is king. Well... Price and deliverability. As for online services retention makes sense of cause.
- JMStewy 12y ago
  The article you're looking for is here: https://www.uie.com/articles/three_hund_million_button/ https://www.uie.com/articles/three_hund_million_button/
  - jimmaswell 12y ago
    It's very sad that such a large amount of users don't have the attention span to deal with a simple register/login field.
    - fuzzix 12y ago
      I already have probably hundreds of registrations on sites I cannot be certain about the security of. I would like to reduce that number.
      - 12y ago
twelfthnight 12y ago
I look at retention in a similar way (for an online university). As for the growth model related here, I would suggest using a traditional survival analysis instead, which is conceptually simpler and accounts for whether or not some users are still active (right censoring). There are also many packages ('survival' in R, for example) which have the algorithms programmed (both simple Kaplan-Meier and multivariate Cox PH) and decent visualizations.
npsimons 12y ago
As a customer, I've always felt that companies that have a lot of advertising (eg, certain insurance and banking companies), are wasting their current customers' money. Just stop to think how much a TV ad costs, then think about why the company you have your mutual fund with has to charge so much for "management and overhead". Car insurance premiums went up? But the little lizard on TV said they were the cheapest!
niyogi 12y ago
There's a sweet irony here in that it's a guest post by somebody who hyperlinks to their website with google analytics tracking (likely for lead gen) but discusses why retention is more important than acquiring users. Oh and it's posted by the guest author. Not that there's anything wrong with that or that the article itself is bunk in any way - just that it's ironic.

96 points by jamiequint 12y ago

My favorite thing about retention is the leverage it gives you. My favorite analogy is the "leaky bucket": You have bucket with holes in it. It's not holding water. You can pour water in as fast as you can and you might be able to get growth... But as soon as you stop, the bucket begins to leak out. Or you can plug holes. Make users happier. Work on re-activation. Give value. If you work on top-of-the-funnel stuff (more water) FIRST and then try to solve retention second, there's a lot of waste. You've leaked users. You've created a group of folks who don't talk enthusiastically about your product. If you work on retention first, all subsequent marketing efforts are more powerful. Word of mouth is more powerful.

WadeF 12y ago
The caveat is that you do need to work on top-of-the-funnel up to a certain point or else you won't have any users to retain or you won't be able to measure the results of your retention efforts.
- medius 12y ago
  Yup, need to pour enough water to find out all those leaks.
Gustomaximus 12y ago
It needs balance. I've worked on products where ~90% of marketing resource is on retention vs. acquisition and they were getting outgrown by poorer products. And if you focus too much on what customers want to can limit opening your product to where the new users will come from. Or simply, customers never hear of your great product. With mass market products people often use whats put in front of them. My experience (as a marketer) is companies tend to swing hard towards one philosophy. I'm yet to work with a company that treats each equally allocating resource between them on ROI vs. a general prefered philosophy.

fragsworth 12y ago

> Do not focus on improving virality unless your overall retention is stable The same logic applies to monetization as well - there's (usually) no sense trying to improve your monetization if your retention sucks.

johnrob 12y ago

This sounds like a fancy way of saying focus on the product first. All the tricks in the world can only last so long if the product isn't a winner. On the flip side, if you have (and can maintain) the best product then it's only a matter of time until the world figures it out (except in a few winner-take-all-markets like online auctions). EDIT: PG has also nailed this concept, with his "well" analogy in http://www.paulgraham.com/startupideas.html http://www.paulgraham.com/startupideas.html.

electic 12y ago

Love the way as you read the article you see this big modal slide down in front of your face and you have to figure out how to get rid of it. There is a tasteful way to do this and this is not one of them. Retention fail.

jamiequint 12y ago
Hey, not sure what modal you're talking about (afaik I don't have one anywhere) can you specify?
- look_lookatme 12y ago
  Here is what popped up as I was scrolling through the post (zoomed) on my phone: http://i.imgur.com/gSUNzUU.png http://i.imgur.com/gSUNzUU.png Here's what it looks like zoomed out: http://i.imgur.com/mTPE6uH.png http://i.imgur.com/mTPE6uH.png Didn't really bother me as much as the parent though.
  - jamiequint 12y ago
    Oh weird, I'll let Andrew know that it would probably be best to turn that off on mobile. Thanks.
    - ColinWright 12y ago
      No, just turn it off, period. If I want to subscribe I'll find the link. If I'm marginal, the modal will make sure I never come back.
      - jamiequint 12y ago
        That is simply wrong, the modal will increase email acquisition which will increase retention every time. The HN crowd always hates this but its true.
        12y ago

beat 12y ago

Tom Tunguz wrote my favorite article on churn. If you're interested in the subject of retention, read this and get where he's coming from with the numbers. He's a quant guru! http://tomtunguz.com/churn-fallacies/ http://tomtunguz.com/churn-fallacies/

Finbarr 12y ago

This is an excellent post. Have definitely learned some of these lessons the hard way recently. This line particularly resonated with me: "If you have high retention and no virality you will sustainably grow your user-base over time. If you have high virality and no retention you will not."

karenxcheng 12y ago
"Do not focus on improving virality unless your overall retention is stable, not continuing decrease after some reasonable period of time." We definitely could have used this a few months ago
sbov 12y ago
You can still make a lot of money off high virality and no retention. You just have to recognize it for what it is: a cash grab rather than a sustainable business.
- shanghaiseo 12y ago
  My thoughts exactly as I read the article. Some purposefully push retention to the side, looking to make the money big and fast rather than sustainable customer group.

mrweasel 12y ago

I'm starting to question the value of the strive towards increased retention, at least for the industry I work in. My employer is a rather successful webshop and as anyone else in the same business we hire in loads of third parties to help increase visibility, conversion and retention. An article, which I sadly can't find again, had a quote from a customer that really made me think about this. The article was regarding not requiring users to signup before buying a product and the quote was something like "I'm not look for relationship with your site, I just want to buy something". For us, the customers that have a "relationship" with us is the first bunch of people I would drop, given the chance. They are the ones taxing customer service the most, they have the most complicate wished and while they might be your ambassadors, they will also stab you in the back. For companies that ships actual goods, retention is not worth wasting money on. It's better to try to reduce your prices and cost. Be extremely visible on search engines and price comparison site and treat every customer as a new customer. If someone shopped with you before and had a positive experience they might choose you over a similar prices competitor, but price is king. Well... Price and deliverability. As for online services retention makes sense of cause.

JMStewy 12y ago
The article you're looking for is here: https://www.uie.com/articles/three_hund_million_button/ https://www.uie.com/articles/three_hund_million_button/
- jimmaswell 12y ago
  It's very sad that such a large amount of users don't have the attention span to deal with a simple register/login field.
  - fuzzix 12y ago
    I already have probably hundreds of registrations on sites I cannot be certain about the security of. I would like to reduce that number.
    - 12y ago

twelfthnight 12y ago

I look at retention in a similar way (for an online university). As for the growth model related here, I would suggest using a traditional survival analysis instead, which is conceptually simpler and accounts for whether or not some users are still active (right censoring). There are also many packages ('survival' in R, for example) which have the algorithms programmed (both simple Kaplan-Meier and multivariate Cox PH) and decent visualizations.

npsimons 12y ago

As a customer, I've always felt that companies that have a lot of advertising (eg, certain insurance and banking companies), are wasting their current customers' money. Just stop to think how much a TV ad costs, then think about why the company you have your mutual fund with has to charge so much for "management and overhead". Car insurance premiums went up? But the little lizard on TV said they were the cheapest!

niyogi 12y ago

There's a sweet irony here in that it's a guest post by somebody who hyperlinks to their website with google analytics tracking (likely for lead gen) but discusses why retention is more important than acquiring users. Oh and it's posted by the guest author. Not that there's anything wrong with that or that the article itself is bunk in any way - just that it's ironic.