How to define the right Retention metric for your business?

Finding the right retention metric is absolutely critical for any business. It will help measure correct KPIs, measure success and deliver value to the stakeholders.

To define retention metric correctly, we have to keep these things in mind -

1. Are we aligning correctly with the frequency of the usage of the product - The definition of retention should stem from the core value of the problem our product is trying to solve. If we don’t align with the natural usage and frequency of the product our users might think the product feels like spam or they might completely forget about it.
2. Are we measuring single action or trying to combine multiple actions - Combining multiple actions of the users to track a common metric might nudge us in the wrong direction. We might end up always nudging the easiest action which might lead to confusion.
3. Are we focussing too hard on revenue - Revenue is always the output and not the input. Product usage determines the revenue which is actually the input.

Once we are out of common loop holes, the best way to define metric in my opinion starts with -

1. Frequency of the usage
2. User Behaviour
3. Who are the users