Why retention is the key to growth

From Retention is King by Jamie Quint:

There are too many companies asking, “How do we acquire more users?” that should instead be asking “How do we get better at keeping the users we already have?”.

It’s easy when approaching the problem of growth to think that you just need to get more users, after all that seems to be the very definition of growth. However, if you take a step back though and think about growth as the maximization of user-weeks over time, it quickly becomes apparent that focusing on retention has a much larger effect than topline growth. This is also much more of a sustainable growth mindset. Rapid user growth followed by rapid user attrition is an indicator of unsustainable growth. Strong retention of users over time is a good indicator of product-market fit, something you’re hopefully looking to achieve anyway.

At a high level, retention is more important than virality because if your users don’t stick around they are not able to invite others to your product over an extended period of time. If you have high retention and no virality you will sustainably grow your user-base over time. If you have high virality and no retention you will not.

Notes:
(1) The key factor in building a large business is whether it grows cumulatively over time. If you have high retention, user growth leads to cumulative growth. But if you have high churn, you need to work hard each month just to stay in the same place.
(2) So why do so many startups make the mistake of focusing on new users instead of retention of current users? Perhaps because marketing is easier than building a great product.
(3) This is so important, it’s been written about before from different angles. See Product strategy — retention trumps acquisition, The best product and growth hacking advice ever, Sustainable growth hacking and Sustainable growth vs. growth hacking.

4 thoughts on “Why retention is the key to growth

  1. Pingback: The number 1 growth hack | A Founder's Notebook

  2. Pingback: If you have low retention, don’t scale and keep your costs low | A Founder's Notebook

  3. Pingback: A simple metric to measure the quality of your user growth | A Founder's Notebook

  4. Pingback: What’s the best advice on what to avoid while you search for product market fit? | BrainQuilt

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