User retention is the single most important metric for growth.
If you are familiar with how customer retention is measured at consumer-based companies, you might know about metrics like Customer Retention Rate (CRR), Dx Retention Rates, Repeat Purchase Rate (RPR).
Today, I would like to introduce three additional metrics that extend beyond the basic CRR. These metrics provide a deeper understanding of user retention and can contribute to effective growth strategies.
Before we dive into these metrics, let’s quickly recap some of the metrics.
Customer Retention Rate: This metric quantifies the percentage of customers who remain active over a specific timeframe, whether it’s measured weekly, monthly, or annually.
Dx retention rates: widely used and popular in the industry. Many companies rely on these metrics, such as Day 1 (D1), Day 7 (D7), and Day 30 (D30) retention rates, to assess user retention at specific intervals following their initial acquisition. Visualizing these rates using a heatmap is a common practice, providing valuable insights into user engagement patterns over time.
While the Customer Retention Rate (CRR) provides insight into retention over a longer period, the D1, D7, and D30 retention rates focus on specific early milestones in the customer lifecycle. Both sets of metrics are valuable for understanding customer retention patterns and pinpointing areas for enhancing customer loyalty and reducing churn.
However, it’s important to acknowledge that these metrics have their limitations. CRRs may oversimplify trends over extended periods, and tracking an ever-growing heatmap can become challenging over time.
During my exploration and discussion with a friend who’s VP of Growth at a gaming company, I learned about a set of metrics that offer a more interpretable approach to evaluating the performance of existing customers, as well as new and returning customers.
This knowledge has become invaluable to me, especially in the context of product development within consumer-based industries. It can serve as a key focal point in understanding and improving user retention across various product settings, and undoubtedly I’d carry this…