Acquisition with habit oriented engagement and compelling retention strategy fuels true product growth. To understand the difference between engagement and retention, let us look at a simple definition from Andrew Chen.
Retention: The act of getting users back to using the product.
Usually measured in Weekly, monthly, or quarterly depending upon the natural frequency of the product. So if your product is like facebook where most users visit daily then daily active users (DAU) or Weekly Active users (WAU) will be a good metric. However, if your product is Paperless post then using a quarterly active user (QAU). N Day retention could be used to measure what percentage of users come back to the product on a specific day. So if Day0 is when they got activated, then we could measure Day1, Day2, and Day7 to measure whether users come back to the product 1 day, 2 days, and 7 days after or not. One caveat is leaning a little too much towards your power users and set the retention too aggressively. More on this later.
Engagement: How much time users spend on activities that you want them to do.
So if you have built a feature such as capturing a video (as in case of product loom), then what % of daily, weekly, monthly users capture a video. If it is about uploading images then what % of daily, weekly, monthly users upload images.This will help understand how many users actually engage with a particular feature. An actionable item for the product team to decide whether to prioritize that feature, sunset that feature, or introduce another feature.
There will be some user group, however, who once were active but have not used the product for a defined duration of time. There are two broader categories in such a user group : a) Dormant users b) Churned users
Understanding the difference between the two will help evaluate the right opportunity size and unlock new growth opportunities.
Dormant users: Users who were engaged with the product, are familiar with the brand, but have not engaged with the product in x period of time. However, they have high likelihood of retuning to your product/platform.
Churned users: Users who were engaged with the product, are familiar with the brand, but have not engaged with the product in x period of time and they have little likelihood of returning to your product/platform.
Not very helpful? After all how do we define users into one group or the other. That is where we need to dig deeper. The framework to better understand the user group is through
a) Qualitative analysis: Interview your users, study them, put yourself in their shoes.
b) Categorize their pain points around whether they stopped using the product because i) Users experienced a lot of friction in using the product and could not achieve the value promised. ii) Lack of features: The product did not have what they expected from the product . iii) Bad acquisition: This is #1 reason why users churn but when focus is growth and not growth with engagement and retention, we end up acquiring a lot of users hoping they would stick around. Users do come to the product but stop using them after a while just because it was not focused at serving their needs iv) Finally users who came to the product, achieved the value but now no longer need to achieve that value such as Tinder. Once you find your partner on Tinder, you would not want to come back, at least for a while. v) Infrastructure issue such as lost their email or switched their devices or operating system on their devices.
c) Define the low hanging fruits of dormant users: These are users who you believe you could bring by either newly introduced features or removing the friction that existed in the product or when their natural frequency reoccurs such as in the case of Tinder a breakup
d) Size the opportunity: Do not run after any user group just because you can solve their pain points. Do a cost benefit analysis of investing your resources vs getting the user group back
e) A/B test: Eventually run a test to verify your hypothesis. Before doing that create hypothesis around the user base you want to go for. Define the metric that you will use to measure the success. Create a decision tree for various scenarios to create an objective assessment of your decisions. Finally run the test to significance.
f) Iterate, iterate, and iterate: Growth is a mindset not a tool. So be ready to fail over and over again. Each failure will bring an invaluable lesson. Use that to inform your hypothesis. In post analysis, capture both the Quantitative understanding (What) and Qualitative understanding (Why)
Then there are churned users. In all likelihood they hated your product so much that there is no point in pursuing them. It wont hurt to send an email or a push notification to these user group but risk that they unsubscribe should be baked into the cost benefit analysis.
Read my other articles on Product Leadership, Product Growth, Pricing & Monetization strategy, and AI/ML here.
