The rules to help you with user retention

If there is one thing that matters more to a business than customer acquisition, it is retention.

Abhishek Anand
6 min readSep 21, 2018

Consumers are a fickle breed. They would love what you are doing, and yet not transact. And businesses are understandably always trying to retain their consumers — to get them to transact more and more, and increase their LTV.

Let us take the example of a SaaS business. How do you reduce churn and increase retention?

There could be a number of different approaches you could be following to achieve this. One quick Google search is enough to present you with a bunch of different ‘strategies and tactics’ that would help you with precisely this problem.

Google’s search results on “how to reduce churn in saas”

But I have a basic question here; and it is a question I find many entrepreneurs missing out on:

At what stage of your consumer’s lifecycle do you think you need to stop worrying about him/her churning out?

The answer to that question is very critical — for any business. It is the answer to that question that marks the beginning of your growth strategy. Take Facebook’s example. They could have focussed on a number of different metrics — first status update, first photo uploaded, liking brand pages etc. Yet, what they figured out as the key aspect to retain a user was — “Getting a user to have 10 friends in 7 days.” And that is all they focused on in their effort to grow to a billion users. Different companies follow similar metrics. Airbnb talks about room nights, Whatsapp used to track the number of times the “Send” button was getting used. (Think about it — monthly active users and all that jazz is good, but unless users were sending messages, Whatsapp couldn’t really call them a valuable user, could they?)

So, what stage could mark the moment where the chances of you retaining a user shoots up exponentially? Have you figured that out yet? Because your retention strategy is going to be centred around the answer to that question.

Let us say if you come to realise that once a consumer has used your services for 5 months:

  1. The probability of him churning out is only 15% as opposed to the 40% probability in the first two months.
  2. There is a 70% likelihood that he will continue to be a customer for at least 24 months.

What will you do with that information?

You would want to channelise all your energy in ensuring that every single new customer continues to use the system for 5 months.

Would consumers be churning out outside of this 5 month window? Of course. But even if you are able to achieve this one goal, the value it will add is just immense. And having a singular, simplified, well defined and concrete goal helps you in being more focused, planned and organised into working towards achieving that goal.


5 months is a long time, and if you are formulating a strategy that enables you in keeping consumers hooked for 5 months, there is a strong possibility that you would have leaks at every step of the process. Your next focus is into plugging those leaks so as to reduce the outflow. So, how do you do that?

By segmenting users into different buckets, and formulating micro-strategies for each of those cohorts.

The retention team needs to draft a narrative and action-plan for consumers in the first month, second month, and so on. (The same process can be followed for drafting a narrative/action-plan for consumers in the fortieth month as well. You can keep on expanding the cohort as and when needed; but for the intent of achieving our targeted business goals here, we just need to go till the fifth month cohort.)

Remember that each cohort would be having a different set of rules and action plans that is aimed at getting consumers to continue using your product and discover the value it is adding to their lives. The value-add being presented and showcased in front of your consumers has to be tangible, meaningful and easily measured.

Sure, your ultimate intent is to retain consumers for their first five months, but the question you would be asking yourself would not be how to retain consumers for 5 months. It would, instead be — what actions can we leverage to engage the consumers of one cohort, and nudge them into the next cohort; ultimately achieving the final goal of them completing 5 months on the platform.

Have you tried asking your consumers what exactly about your product/service made them pay for it? Have you tried figuring out what is that one pain-point you solving which has the largest contribution when it comes to why users have been signing up?

Do you know what percentage of your consumers were underwhelmed after a couple of weeks of having paid for your product? And if you do, then did you try to help them get the best out of your product — webinars, tutorial videos etc. And failing this, did you try seeing if there are other aspects of your product that may make more sense to these disgruntled consumers?

One of the businesses I was consulting last year is a accessories brand. Their high quality products are handmade, and are crafted by economically weaker segments of the population from a small town in India. Quite a noble endeavor by the founders. I implored them to include a small note in their packages — one that showcased one of their workers, and a little bit about his/her life story. This helped the consumers get directly invested in the artisans who were producing the merchandise, and this drove up their repeat transactions. Every single consumer doesn’t need to partake in every single one step you take towards increasing consumer engagement, but there now exists a multitude of continual activities — some of which will pique your consumers interests. Keep an eye out for those. Identifying and isolating these out early would be key in identifying which actions are working best to reach your retention goals. Why? Because it won’t bode well for your business in the long run if you are flooding your consumers with branding activities. You want to weed out the dead weights — the ones where there is nothing for the consumer to engage with, and which are completely misaligned with the vision of the business and are not adding incremental value to the business.

Build a relationship with your consumers. It will drive value to your business.

This is possibly the best line I came across today; one that presents a strong case for consumer retention:

80% of your future profits will come from a mere 20% of your existing customers.

That’s it for today. See you tomorrow!

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Abhishek Anand

Helping businesses grow 10x faster, and scale efficiently. Top Writer — Quora, Medium. Drop in a line if you’d like help with yours.