How To Keep Your Users | Startup School

Summary

This video provides a deep dive into cohort retention analysis, emphasizing the importance of understanding trends over individual data points. It highlights common mistakes like overvaluing short-term retention and relying too heavily on analytics tools without understanding their data. Key strategies to improve cohort retention include product optimization, acquiring better-fit users, enhancing first-time user experiences, and leveraging network effects. The ultimate goal is not just flat retention curves but upward trends over time, signaling long-term engagement and growth. The video concludes with the importance of using qualitative user feedback to refine your product and ensure sustained success.

Takeaways

• 😀 Don't focus on isolated data points from cohort retention curves. Analyze the entire curve to identify trends and patterns over time.
• 😀 Cohort retention curves should be refreshed regularly (weekly or bi-weekly) to catch issues early and make necessary adjustments.
• 😀 Analytics tools might mismeasure cohort retention; founders should manually track data from logs to ensure accuracy and build a better understanding.
• 😀 The shape of the cohort retention curve is more important than individual data points. A product might show strong retention early but drop off later.
• 😀 Improving your product (speed, features, usability) can flatten and increase the retention curve, leading to better long-term performance.
• 😀 Targeting the wrong users can lead to poor cohort retention. Consider acquiring better users by refining your marketing and user acquisition strategy.
• 😀 Onboarding and user activation are critical. A smooth, intuitive first user experience can significantly improve retention rates.
• 😀 Network effects, where more users improve the product experience, can lead to better retention over time, especially in social or sharing-based products.
• 😀 Slice cohorts by different dimensions (e.g., country, user type) to identify where retention is strong or weak and adjust your strategy accordingly.
• 😀 A 'layer cake' graph, where older cohorts continue to contribute to active user growth, signifies that your product is retaining users and growing effectively.

Q & A

What is the main focus of cohort retention curves?

The main focus of cohort retention curves is to track user engagement over time, specifically showing how users interact with a product after their first use. The goal is to understand if users are continuing to use the product and how retention changes with different user cohorts.

Why is it important to analyze the entire cohort retention curve, rather than just a single data point?

It’s crucial to analyze the entire retention curve because focusing on a single data point can be misleading. A single week's retention might look great, but without considering the trend over time, you might miss underlying issues or signs of early churn.

What are the risks of relying too heavily on analytics tools for cohort retention data?

Analytics tools can sometimes provide inaccurate or misleading information. They may not separate cohorts properly, measure rolling retention instead of cohort-specific retention, or mix up return users with users who haven’t returned during the specific time period. It’s advised to understand and manually build cohort curves from raw data to ensure accuracy.

How can you improve cohort retention curves?

Improving cohort retention can be done through various methods: improving your product (new features, reducing latency, simplifying user flows), acquiring better-targeted users, improving the onboarding process, and utilizing network effects in your product where more users enhance the experience.

What is a 'layer cake' chart, and why is it significant?

A 'layer cake' chart is a visual representation of cohort retention where each layer represents a different cohort. This chart shows the total number of active users and how they are distributed across cohorts. A well-constructed layer cake chart, with growing layers from old cohorts, indicates healthy, long-term product growth and retention.

Why do retention curves sometimes improve over time, and how can this be achieved?

Retention curves can improve as a result of meaningful product improvements or better targeting of the right customer base. Product updates, better user acquisition strategies, and optimizing the onboarding experience can help improve retention over time. If the right improvements are made, cohorts will show higher retention and become flatter, indicating that users are sticking around.

What does it mean when cohort retention curves 'flatten out,' and why is this important?

When cohort retention curves flatten out, it suggests that users are consistently engaging with the product over time, rather than experiencing sharp drops in engagement. A flat retention curve indicates a stable, sustainable user base and signals that the product is meeting users' needs.

How can targeting the wrong user demographic impact cohort retention?

Targeting the wrong user demographic can lead to poor retention if the product does not resonate with the target group. For example, Google Photos initially targeted younger users, but the product’s use case of storing life memories did not align with the behavior of younger individuals, leading to low retention in that cohort.

What role does the onboarding process play in improving cohort retention?

The onboarding process is critical in improving cohort retention. A smooth and clear onboarding experience helps users quickly understand the product and integrate it into their daily routine. An easy-to-understand first-time experience increases the likelihood of continued usage, improving overall retention.

What are network effects, and how do they impact cohort retention?

Network effects occur when the value of a product increases as more people use it. For products like social networks or communication tools, the more users there are, the better the experience becomes for everyone. Products with network effects tend to see improved cohort retention over time as the user base grows and the product becomes more valuable.