This is one of the best short-form writings I've seen on retention - more people should be aware of what 'normal' retention curves look like and how important it is to focus on this to grow an audience - also the number you'll need for something (like a game) that requires multiple people for a period of time to use the product. Your article would benefit from a visual illustration of a few of the different retention patterns that you talk about in your text. Thanks Andrew!
Haha, this is quite depressing indeed. Especially because I work at Churnkey. And Churnkey helps companies reduce churn. Fun. I'd love for you to take a look and see the results we've been able to drive (https://churnkey.co/). The Intelligence suite of products is able to do things that were humanly impossible to do previously (https://churnkey.co/feature/adaptive-offers). If you'd be open to to productiz-ing any of your knowledge, I would love to partner together. I do agree with a lot of points and your ability to pattern match. But... there are still ways to retain revenue without overhauling the entire product.
I am here from #Glasp @kazuki who encouraged me to take a look at this article.
I'm glad I did.
My #highlights for my #AIClone and #Fireshot has been saved for #Gemini Pro 2.5.
I'm here, because Kazuki Nakayashiki has recent highlights as well.
Shared this article in a #LinkedIn post and instructed others to read it as well.
I'm a #PatternsFreak. This is a #reference I will share when #newproduct developers start #gaslighting, because I know I'm a valuable #consumer and when I do #trials I test them for #performance not based on who developed it.
#Branding is not something we can get away from. #However, this article gave me #MyWorth back. If you #throwmeaway after a one-time purchase (especially #authors) I'll do all I can to make your world online a #tragicexperience especially if your #aim is to #blowsmoke up my #butt.
With #brickandmortar you simply #boycott the establishment and wait for them to #change.
Online personalities have just created this #Aura about them about #Retention.
They simply don't care, because #badpress is enough in marketing for people to research their product and develop #codependance.
So the best thing to do is #deletecomments and go my merry way and take the experience as more research to find a product I'm loyal in #endorsing through examples of my #dailyuse.
I'm sick of the #hype #YET I can only #hangout and make #commentary in my #newsletter.
This is really insightful. And I strongly agree with the two ideas below;
– "This magic comes from a fresh insight about the market or customer needs, and while it might seem obvious in retrospect, it drives super high retention because this product is the first to figure it out."
– "Timing matters a lot. If you get the timing off, and it's a low-interest category, and your differentiation isn't different enough, then what you'll find is you've traded a retention problem for a user acquisition problem."
From my experience launching the world-first product after ChatGPT, it went viral, and I felt PMF. The retention was so high that it solved the real pain point that users had.
The difficulty was that even if the retention is high, there are a lot of copycats in the market, so it was hard to keep the top spot in the market and not be replaced by other products.
As the resident data guy at a social game company for a number of years, I went through an absolutely STAGGERING number of iterations on retention metrics, with each change of leadership in product, marketing or finance thinking they had the key to improving them. I finally came to the exact same conclusion as Andrew here, that you simply cannot iterate and test your way to better retention. I finally printed a paper sign and taped it to my monitor: "It's The Product, Dummy."
That said, I think some people could come away from this essay depressed and with the idea that they can't change retention so there's not much use in measuring it at all. Actually, it's really important to know your retention because it helps you manage the ROI on your marketing spend (more marketing spend ALWAYS results in worse retention metrics, but some marketing is of course better than others). Also, for most products, D1 retention is a key defensive metric -- following it may not grow your product, but it will alert you better than almost anything else as to when you accidentlly screwed up your product with a badly designed new feature or (more often) a broken release.
I followed you since you independently hosted your blog, then Medium and then here. This piece is one of the unique ones that come from a deep understanding of the subject.
Please find the time to write about customer acquisition in this era of AI. It seems everyone is using chatting ai agent. No one is searching on google anymore. So, how users will discover new apps, products and sites? Reading above that going viral is not that valuable, then how to be discovered?
Your unique position in the VC seeing and dealing with startups, I'm sure you have visibility into this tiny problem.
Its top-notch writing. People are so driven away by excitement that they ignore the nature that exist.
And I think, both short term and long term could be managed well, by seperating them. Like, I know this fact exist(for long term) and won't even ignore it, but for now inspite of the fact existence, I will work against it so its efficient & better to be manged in short term. And alongside will even do what long term requires.
Actually from my POV, the issue of retention can't be just blamed on industry we choose. As Ofcourse not everyone gonna choose the same thing, nor its easy to change later. So even if we picked the industry with low retention. We should better focus on Channels/Medium of Customer Acquisition. Cause how we reach, whom we reach, control and connection we have with them.
We get retention issue cause we not know whom we are reaching. We try all A/B test and so many different things on people who not needed the product in first place.
Another thing is there is always someone who need what we are offering, but just we can't reach them. No matter what channel we utilise - currently there is no cure for this issue (if we could just reach to people who need us,without wandering.) - If it was, there would have been no issue for Customer Retention.
But it isn't for now.
Still we could try to have more control on knowing who we are actually reaching to. So we not waste resources in trying to improve our product for wrong Audience.
Cause not every improvement is required nor every improvement is good. Nor a improvement is solution to every problem, what if the problem not existed in first place.
Really interesting read, I'd be curious to hear your view on how trust drives this?
A big TOF ad campaign implies big promises. A high churn rate rate implies broken promises.
It is VERY difficult to change peoples' minds when they don't trust the words you say. Which leads to requiring other trusted people to vouch for you.
Then in relation to your golden cohort, this is a bit more of stretch, but would these people *feel* they've come along for the journey of the product development? Perhaps even feel like they're a part of the development?
This is one of the best short-form writings I've seen on retention - more people should be aware of what 'normal' retention curves look like and how important it is to focus on this to grow an audience - also the number you'll need for something (like a game) that requires multiple people for a period of time to use the product. Your article would benefit from a visual illustration of a few of the different retention patterns that you talk about in your text. Thanks Andrew!
yes next iteration of this will def have more graphs :)
all truth
thank you sir!
Haha, this is quite depressing indeed. Especially because I work at Churnkey. And Churnkey helps companies reduce churn. Fun. I'd love for you to take a look and see the results we've been able to drive (https://churnkey.co/). The Intelligence suite of products is able to do things that were humanly impossible to do previously (https://churnkey.co/feature/adaptive-offers). If you'd be open to to productiz-ing any of your knowledge, I would love to partner together. I do agree with a lot of points and your ability to pattern match. But... there are still ways to retain revenue without overhauling the entire product.
P.S Made this pretty little site with some ideas: https://www.fixingchurn.com/
I am here from #Glasp @kazuki who encouraged me to take a look at this article.
I'm glad I did.
My #highlights for my #AIClone and #Fireshot has been saved for #Gemini Pro 2.5.
I'm here, because Kazuki Nakayashiki has recent highlights as well.
Shared this article in a #LinkedIn post and instructed others to read it as well.
I'm a #PatternsFreak. This is a #reference I will share when #newproduct developers start #gaslighting, because I know I'm a valuable #consumer and when I do #trials I test them for #performance not based on who developed it.
#Branding is not something we can get away from. #However, this article gave me #MyWorth back. If you #throwmeaway after a one-time purchase (especially #authors) I'll do all I can to make your world online a #tragicexperience especially if your #aim is to #blowsmoke up my #butt.
With #brickandmortar you simply #boycott the establishment and wait for them to #change.
Online personalities have just created this #Aura about them about #Retention.
They simply don't care, because #badpress is enough in marketing for people to research their product and develop #codependance.
So the best thing to do is #deletecomments and go my merry way and take the experience as more research to find a product I'm loyal in #endorsing through examples of my #dailyuse.
I'm sick of the #hype #YET I can only #hangout and make #commentary in my #newsletter.
Best,
Louisa
This is really insightful. And I strongly agree with the two ideas below;
– "This magic comes from a fresh insight about the market or customer needs, and while it might seem obvious in retrospect, it drives super high retention because this product is the first to figure it out."
– "Timing matters a lot. If you get the timing off, and it's a low-interest category, and your differentiation isn't different enough, then what you'll find is you've traded a retention problem for a user acquisition problem."
From my experience launching the world-first product after ChatGPT, it went viral, and I felt PMF. The retention was so high that it solved the real pain point that users had.
The difficulty was that even if the retention is high, there are a lot of copycats in the market, so it was hard to keep the top spot in the market and not be replaced by other products.
I think it's magic by magic.
Here's my learning: https://glasp.co/kei/p/dfba7f5f1e4f04d4ff9a
The retention rate on this article from start to finish is probably 70% after the first few paragraphs, then a flat retention curve to the end ;)
Fantastic read as always! Any chance you’ll share D1, D7, D30 retention benchmarks by product category in the future? That would be super insightful.
As the resident data guy at a social game company for a number of years, I went through an absolutely STAGGERING number of iterations on retention metrics, with each change of leadership in product, marketing or finance thinking they had the key to improving them. I finally came to the exact same conclusion as Andrew here, that you simply cannot iterate and test your way to better retention. I finally printed a paper sign and taped it to my monitor: "It's The Product, Dummy."
That said, I think some people could come away from this essay depressed and with the idea that they can't change retention so there's not much use in measuring it at all. Actually, it's really important to know your retention because it helps you manage the ROI on your marketing spend (more marketing spend ALWAYS results in worse retention metrics, but some marketing is of course better than others). Also, for most products, D1 retention is a key defensive metric -- following it may not grow your product, but it will alert you better than almost anything else as to when you accidentlly screwed up your product with a badly designed new feature or (more often) a broken release.
++ Good Post. Also, start here : 500+ LLM, AI Agents, RAG, ML System Design Case Studies, 300+ Implemented Projects, Research papers in detail
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Such a great read - honestly one of the best holistic descriptions of retention, what it is and its implications. Thanks for sharing!
Interesting take
Do you typically look at N-day, or unbounded retention when you're evaluating companies?
Awesome post! Very comprehensive view of retention that feels very accessible. Thank you!
I followed you since you independently hosted your blog, then Medium and then here. This piece is one of the unique ones that come from a deep understanding of the subject.
Please find the time to write about customer acquisition in this era of AI. It seems everyone is using chatting ai agent. No one is searching on google anymore. So, how users will discover new apps, products and sites? Reading above that going viral is not that valuable, then how to be discovered?
Your unique position in the VC seeing and dealing with startups, I'm sure you have visibility into this tiny problem.
Its top-notch writing. People are so driven away by excitement that they ignore the nature that exist.
And I think, both short term and long term could be managed well, by seperating them. Like, I know this fact exist(for long term) and won't even ignore it, but for now inspite of the fact existence, I will work against it so its efficient & better to be manged in short term. And alongside will even do what long term requires.
Actually from my POV, the issue of retention can't be just blamed on industry we choose. As Ofcourse not everyone gonna choose the same thing, nor its easy to change later. So even if we picked the industry with low retention. We should better focus on Channels/Medium of Customer Acquisition. Cause how we reach, whom we reach, control and connection we have with them.
We get retention issue cause we not know whom we are reaching. We try all A/B test and so many different things on people who not needed the product in first place.
Another thing is there is always someone who need what we are offering, but just we can't reach them. No matter what channel we utilise - currently there is no cure for this issue (if we could just reach to people who need us,without wandering.) - If it was, there would have been no issue for Customer Retention.
But it isn't for now.
Still we could try to have more control on knowing who we are actually reaching to. So we not waste resources in trying to improve our product for wrong Audience.
Cause not every improvement is required nor every improvement is good. Nor a improvement is solution to every problem, what if the problem not existed in first place.
Really interesting read, I'd be curious to hear your view on how trust drives this?
A big TOF ad campaign implies big promises. A high churn rate rate implies broken promises.
It is VERY difficult to change peoples' minds when they don't trust the words you say. Which leads to requiring other trusted people to vouch for you.
Then in relation to your golden cohort, this is a bit more of stretch, but would these people *feel* they've come along for the journey of the product development? Perhaps even feel like they're a part of the development?
Cheers.