Written by Archana Kumari
on 

Oh wait, retention can kill your business too?

Lately, I have been reading a lot about how retention is closely related to success of the product. However, retention can also be a silent killer if you are looking at the metrics holistically. Here are three points that kept coming up frequently -

  1. It is easy to mask retention as success, however if you look closely you might be losing users everyday.
  2. Even if retention is great, due to lack of engagement your business might be dying silently
  3. Sometimes, short term retention views mask the long term view giving a false picture of early success.

Details -

  1. Choosing the right metric to depict success is the key. It is very easy to make growth look good with the wrong metric.
    • Example → Monthly active users can behave very differently than Daily active users. Let’s suppose MAU is rising month over month, but DAV is suffering every single day. Fewer users are coming to the platform to use the product every single day. Eventually the MAU curve will flatten out and it will be evident users are not coming back to use the product.
  2. Retention and Engagement should go hand in hand. Many times we think we have a good retention breadth but we fail to see we lack in engagement depth.
    • Example → 100 daily active with thrice the engagement is better than 200 daily active users who are visiting only once.
  3. If we are short sighted when it comes to retention plans, we soon will lose the big picture. Most companies operate on short term goals and stop investing in retention goals once they think they have active retention in the last few months and it is going to remain steady in near future.
    • Example → Company A has one million new users with 85% retention, Company B has 2 million new users with 65% retention. It might look like Company B is doing well in the short term but if we extrapolate the graph it will be evident soon that Company A will eventually do better in the long term.

Alt text

In Summary, Retention is not analysed carefully and can break a company. It should be prioritised keeping long term goals in mind. Retention metrics should be tracked holistically. Lastly, retention breadth as well as depth both are important for survival.