Retention and Engagement Mastery

"For a PLG product, however, you’ll leverage channels like email, in-app messages, push notifications, and SMS to drive product usage and user engagement—so lifecycle marketing tools such as Customer.io and Braze are commonly used to trigger the right message to the right user at the right time."

"Manually onboard new users, to make sure they see your value."

"The first consistently effective way to increase engagement with a feature is by reducing the friction associated with using it. This includes reducing the number of steps, reducing the effort to complete each step, and reducing how much we need to learn before we can really use it (i.e. reducing the “cognitive load”)."

"As Brian Balfour pointed out, “if you have poor retention, nothing else matters.” As you’ll see in the examples below, it is certainly possible to increase retention, and when you can pull it off it’s often the biggest lever you have to grow your business."

"The easy (but less useful) way to measure retention is by looking at the percentage of active users that are no longer-active a month/week/day later, e.g. “5% of our users churn each month.” Though useful, this approach blends old and new users, and thus hide a key piece of information about the health of your business: how many of your users stick around long-term."

"One of the more successful experiments we ran at Airbnb to reduce host churn was to give hosts a way to “pause” their listing, instead of removing it. This gave them time to deal with whatever they needed to deal with and then easily come back when they were ready."

"The more integrated your product is into a person life, or an organization’s workflow, the harder it is quit. For example, Slack (just try taking it away), AWS (just imagine the switching costs), and WhatsApp (all your friends are there!)."

"At the same time, retention is both the most important and the least understood metric at most companies. In my experience, it takes up to six months to nail accurate retention reporting."

"My general favorite method is unbounded retention because (1) I like my KPIs to be connected, proportional, and correlated to each other, and (2) unbounded retention is the inverse of churn, so it gives me another way to validate and test my data, increasing the confidence in my reporting (the higher the churn, the lower the retention, and vice versa)."

"Often a mistake I see SaaS companies make is reporting one “blended” retention, with a mix of free and paid users. This can be misleading, because users who pay for the product are likely to use it way more than free users."

"Learning a language is hard, especially since it’s self-motivated learning. So we knew we had to create a fun experience in order to create a sticky product with good retention. We gamified language learning through many product features: mechanics like streaks and leaderboards, or having our mascot Duo be your coach, or using design elements like progress bars."

"In addition to just messaging, try to remove as much friction. Double down on fremium offers, extend trials, give credits, and short-term subscription commitments. Show empathy to your markets."

"In our case, having a single-player mode gave us more time to launch and refine key social features that improved the network effects of our product. Great retention reduces the cost of making mistakes, and allows you to take bigger risks and learn faster."

"As your friends start leaving, the product quickly gets significantly worse. That decay in value is nonlinear. Early departures disproportionally worsen the overall value of the network."

"Most of your bounced users won’t actually want what you’re selling (sorry). But, a significant percentage of bounced users are just not ready to buy right then, or got distracted by another task, or got confused by your flow. This latter group of users is the users you want to target with a re-engagement strategy."

"The 'aha' moment refers to the first time a user experiences value from your product. This concept originated from Facebook's early growth strategy where if a user added 10 friends within 7 days, they were more likely to continue using the platform."

"- **User retention**: % of new users who are still active 3-6 months later - **Logo retention:** % of new companies who are still active 3-6 months later - **[L7/L30 retention](https://a16z.com/2018/08/06/power-user-curve-l30-l7/)**: Number of days that users are active per week/month"

"User retention: % of new users who are still active 3-6 months later. Logo retention:% of new companies who are still active 3-6 months later. [L7/L30 retention]: Number of days that users are active per week/month."

"As you learn more about what levers most impact the health and growth of your business (e.g. retention, margins, acquisition, etc.), focus on those. Try to narrow in on the two or three metrics that most directly drive your business’s success."

"Cohort engagement: The percentage of users who are still doing something valuable (e.g. meditating, watching, listening, learning, matching, etc.) X weeks after signing up."

"Cohort retention: The percentage of paid users who are still paying X months later [*Over 70% at 6 months is great*]. Resurrection: The percentage of churned users who re-subscribe."

"Churn should always be modeled between (1) intentional and involuntary churn and (2) soft and hard churn. Where I see companies losing meaningful percentage points is in overlooking involuntary churn—good data instrumentation can flag these events, like credit card declined, forgot password, connection errors."

"Though you should generally spend your time focusing on cohort retention and net revenue retention instead of monthly churn—because monthly churn blends new and existing users and hides what’s really going on long-term—it’s still a powerful metric, because it’s quick (you don’t have to wait for cohort curves to flatten), it’s easy (every dashboard has this)."

"Monthly churn benchmarks all add up to the most important retention metric of all: the point at which your cohort retention asymptotes. Chart the percentage of users remaining in a given cohort over time—at what level does that line flatten out, or in the very best businesses, start to turn back upward again?"

"In SMB/Mid-Market SaaS especially, revenue retention is much more important than customer retention. Net revenue retention can look very healthy even with low logo retention in these businesses."

"Losing 2% of users each month? Grow by over 2% and you’re 📈. Depressingly, your monthly churn stat also tells you how quickly you’ll churn through your users if you do nothing. For example, with an 8% monthly churn, you’ll lose almost two-thirds of your users each year 😵‍💫"

"“Great retention is the scalable way to grow a product. It’s the best indicator of product-market fit, it is the most important factor in a user’s lifetime value, and high retention drives all of the best acquisition strategies. It’s growth’s equivalent of the triple word score.”"

"Let’s define net revenue retention as a company’s monthly recurring revenue (MRR) one year ago divided into the current month’s MRR from that same group of customers. Essentially, how much revenue are you driving from one cohort of customers over time?"

"Too often we indexed in a juicy bonuses (join now get $1000!). The premise of those weren’t habit forming -- a guarantee is. You naturally get higher intent users through the funnel."