If your product needs a high volume of regular traffic to bring value to your company (which is probably the case if you’re running a freemium, SaaS, ad-driven or in-app purchase driven product) you probably already know that acquiring a user is great, but making sure your first time visitors become more than one-time window shoppers is even more important. In other words, you won’t be able to grow your product and user base if you don’t nail retention! In the following pages, you’ll find a few guidelines to help improve your product’s retention.
Measure your retention
Before you attempt to quantify your retention, you need to define what retention means for your product. Retention isn’t all that straightforward to define: it really depends on your product and its objectives. However, beware of simply counting every user who connects to your app or site as a regular user, as some of them may not even be using a single feature. We recommend thinking about a sort of “retention funnel”, a set of user behaviours that are required before you consider a person to be a true user of your product. For example, Spotify could use a set number of song plays per month to define what they would consider to be a monthly active user.
Cohorts are the answer
Counting how many user accounts exist on your service seems obvious, and might make you feel like you’ve accomplished your mission as a product manager. However, it’s clear that this number will inevitably increase with time – and thus isn’t a great indicator of your product’s health (unless you’re deleting user accounts, which we don’t recommend!).
Even if you seek to define a metric of active monthly users, you may be fooled into overestimating the success of your product. Of course, having an increasing amount of monthly active users is great, but even this more precise metric won’t help you understand if your users are continuing to use your product over a long period of time, or if you’re simply acquiring more and more users each month who’re only sticking around for 3 months.
In order to have a clearer picture of how many people are regularly using your product, we highly recommend using cohort analysis. A cohort is a group of users that share a common trait, often, in the software industry, their sign-up date to your product. So analysing your product’s use via cohorts mean you construct groups of users that are defined by the week they signed up to your product. You can then analyse each group’s use of your product week by week to see if each subsequent group, on average, is using your product for a longer or shorter period of time (weeks, months, years…). As a product manager, the features you decide to develop with your team and the marketing initiatives you work on should all aim to improve your cohort retention rate – meaning each cohort’s users should remain users of your product for a longer period than the cohort that preceded them.
Once you’ve got everything set up, the best way to analyse your cohort retention is with a Triangle Heatmap, as visible below. This table lets you easily visualise the retention value, expressed by percentage, of each cohort, week by week.
Analyse your user engagement
In order to properly understand your retention metrics, you also need to segment your user base depending on their frequency of use and date of last visit. A simple way of doing this is to split your user base into three groups.
Power users: they’re your regular die-hard users your know your product very well. They might also be active in your community, whether that’s on social media, forums, or on your product itself if it has a social component. Keep these users in mind, as they can be highly useful to beta test new features and to drive referrals.
Dormant users: Once regular users of your product, these users haven’t logged into your site or app in a while. Your objective should be to understand why they stopped using your product, and to then correct the potential issues they faced and communicate about it to bring them back into the fold.
Resurrected users: These are your ex-dormant users. It’s important to not confuse them with current users who’ve never quite left your product, as you need to try to understand what brought them back to your product, and what’s important to them.
Depending on your product, you can segment your audience in different ways. It may be the average length of each session or maybe the features used most frequently that better define your different segments. What’s important to keep in mind is that to improve your retention you need to deepen your comprehension of your user base – and segmentation by user engagement is a great way for doing just that.
Improve your retention
It can be tough to know what your product’s retention should look like. We recommend trying to talk to a fellow product manager who manages a similar product, or reading some good blogs to figure out a baseline retention objective that you can get started with. Keep in mind that retention varies a lot between market segments, types of products and what kind of users you’re trying to attract and retain. Once you’ve fixed an objective, there are different actions you can take to get started.
Work on your product marketing
Your retention rate is the mirror image of your product’s value proposition: if lots of people are trying your product, but few are becoming regular users, there may be a lack of coherence between your marketing messaging and the value your product delivers. If this is the case, tweak your marketing efforts to make sure they’re highly focused on the real value your product is delivering to your users.
Reactivate your users
Today, great digital products are commonplace. Your users may simply be forgetting your app or service on a screen that is jam-packed with different apps, or a web browser with a favorites list a mile long.
It is possible to get these users back by inviting them back to your product. A well-run marketing campaign can do wonders if planned correctly. However, beware, as campaigns that are considered too pushy, badly targeted or too spammy can have a negative effect, putting your ex-users out of reach for good.
In order to make sure this doesn’t happen, ask yourselves some questions about your users before you get started:
- Have these users forgotten your product? If so, why?
- Did the person stop using your product because of a bug, or missing feature?
If you’re able to understand why your users are forgetting your product, you can create and target a much more effective campaign to reactivate them:
- Mentioning a new feature that was missing when they were using your product.
- Explaining that a known issue with your product has been corrected and that an update is available.
Improve your product’s retention funnel
Before getting to work, take a good look at your metrics and identify at which parts of the user lifecycle are costing you the most users. Try to understand why this is the case, and start thinking about how you can improve your product and fluidify your funnel.
A great strategy is to identify individual users who have stopped using your product at the point in your funnel where you’re having difficulties, and conduct interviews with them. You’ll need advanced analytics tools to isolate and identify these users (Mixpanel works great for this). These users will be able to explain the issue they had, confirming your intuition, or perhaps putting you on a different track. Secondly, they may be able to suggest improvements you can make to your product.
After speaking with around a dozen users and selecting a few good ideas to try, run some A/B tests on different cohorts and measure the results. Then, you just need to keep the implementation of your product that is getting you the best retention results.
Iterative improvements are great, but sometimes you’ll need to go a step further to get the results you’re after:
- Rethink your user experience in a more holistic and in-depth way. Changing your product by adding gamification features or by building a new onboarding system can have a worthwhile impact on your retention.
- Try to specifically build sticky features that will ensure your users frequently need to come back. Often, features with a social component are great for this, as they generate engagement and also give you a reason to send notifications to your users when another user interacts with them.
If you’re still having issues finding ideas to improve your retention, change things up by studying your power users, instead of those who’re forgetting your product. These users are in touch with what makes your product great, and their repetitive use is an indicator of the value your product is delivering to them – use them as inspiration to show the rest of your users how awesome your product is!
As highlighted throughout this creed, improving your retention starts with a deep understanding of how your product is being used. Many analytics tools exist today to help you do just that: Google Analytics, Mixpanel, Kissmetrics, Capptain, Flurry and Kontagent are a few good ones you should take a look at. Take the time to benchmark and test them, as they’ll suit your product more or less depending on your product’s platform (web, mobile, …) business model (ad-driven, subscription driven…) and users (B2B or B2C).
A part from solid analytics, there are some other things to take a look at:
- What are your users saying about your product? If you’re managing a mobile app that is distributed through a store, studying and following your ratings and comments is a great place to get started. You can use AppAnnie or Distimo to help you do this.
- If you want to encourage your users to give you direct feedback, look at services like UserVoice, a quality service that is easy to set up and will enable you to hear directly from your users. You can also look into improving your customer feedback in a more general sense, by requesting the customer service team starts using a tool like Zendesk – which means you can have access to dashboards and metrics to help you improve your retention.