Product Retention: Everything you need to know on a single page
Over the years, I've found that retention is often the most critical and confusing metric in building (software) products. To help others get a better understanding, here's a summary of my notes:
1/ Define ‘active user’:
Most early stage startups go with ‘app opens’ because it’s easier to measure. Use the main user action (e.g. tracking, read article, booked something) for the cleanest data and to capture truly active users.
2/ Pick your retention type:
- N-day retention: Percentage of users returning on a specific day, e.g. day 7. Use this for regular user behavior or short term analysis like free trials.
- Unbounded (rolling) retention: Percentage of users returning on a specific day or later.
3/ Visualize the data:
Use line charts, cohort graphs, or KPI dashboards to visualize your data. Charts effectively compare various cohorts, such as free vs. paid users or different registration dates. Here is an image comparison of these two.
4/ When to measure retention:
It’s hard to find exact numbers. Early on, user interviews and database info are crucial. Aim for 200+ users for significant insights. Meanwhile, concentrate on user feedback, engagement, and simpler metrics like sign-ups or daily active users.
5/ What’s a good retention?
A good rule of thumb is: if you fall below 20% (6 months), this should be your main focus. Here are some benchmarks:
- Consumer Social: >25%
- Consumer SaaS: >40%
- Travel: >20% - B2B SaaS: >50%
- Mobile apps have a lower retention: >10% (30-day)
Hope, this will help some of you. Any feedback is welcome!
