User Retention Rate Measure
A User Retention Rate Measure is a performance metric that quantifies the percentage of users who continue to use a product or service over a given time period.
- AKA: Customer Retention Rate.
- Context:
- It reflects the ability of the product or service to retain its user base.
- It can range from being a Full Retention Measure, to being a Rolling Retention Measure, to being a Return Retention Measure.
- It can (typically) be used to assess the health and success of a product or service, especially in digital platforms like apps and websites.
- It can (often) be calculated using various formulas, depending on the specific goals and characteristics of the user engagement model.
- It can (typically) involve tracking the number of active users at the beginning and end of a period, adjusting for new users acquired during that period.
- It can (often) serve as a critical input for improving user experience, product offerings, and marketing strategies.
- a Chatbot User Retention Rate,
- ...
- Example(s):
- Rolling Retention, which tracks users who return on or after a specific day within the time period, provides a more flexible approach than classic or full retention by treating active daily users the same as those who return only once during the period.
- Return Retention, looking at users who return at least once within the chosen timeframe, offers the most flexibility in measuring user retention.
- ...
- Counter-Example(s):
- Customer Churn Rate,
- User Acquisition Rate, which measures the rate at which new users start using a product or service.
- Conversion Rate, which measures the percentage of users who take a desired action out of the total number of users.
- Service Stickiness Measure, such as DAU/MAU.
- Bounce Rate,
- Click-Through Rate.
- See: Net Promoter Score, Engagement Rate, Customer Lifetime Value, Growth Hacking, Loyalty Programs, Onboarding Process, Reactivation Campaign.
References
2024
- (ChatGPT-OpenAI, 2024) ⇒ Prompt: Summarize the concept User Retention Rate in 1- 2 paragraphs. ChatGPT (model:gpt-4-turbo-preview). Retrieved: 2024-02-25.
- QUOTE: User Retention Rate is a crucial metric in managing and understanding a product's success, especially in digital services, applications, and platforms. It measures the percentage of users who continue to use a product over a specific period following their first use or interaction. In essence, it assesses the ability of a product to engage and maintain its users over time. A high retention rate indicates a strong value proposition and user satisfaction, as it implies that people find enough value in the service or product to keep coming back. Conversely, a low retention rate may signal problems with the product or service, such as lack of engagement, poor user experience, or better alternatives available in the market.
Calculating user retention rate involves identifying the number of users at the start of a period (e.g., a month), the number of those users who are still active at the end of that period, and then dividing the number of retained users by the initial number. This calculation can help businesses and developers make informed decisions about product improvements, marketing strategies, and customer service policies. Additionally, it serves as a key indicator of potential revenue, as retaining existing users is often more cost-effective than acquiring new ones. By focusing on enhancing user retention, companies can ensure sustained growth and a loyal user base.
- QUOTE: User Retention Rate is a crucial metric in managing and understanding a product's success, especially in digital services, applications, and platforms. It measures the percentage of users who continue to use a product over a specific period following their first use or interaction. In essence, it assesses the ability of a product to engage and maintain its users over time. A high retention rate indicates a strong value proposition and user satisfaction, as it implies that people find enough value in the service or product to keep coming back. Conversely, a low retention rate may signal problems with the product or service, such as lack of engagement, poor user experience, or better alternatives available in the market.
2023a
- (Smith, 2023) ⇒ Oren Smith (2023). "10 Customer Retention Metrics & How to Measure Them." In: blog.hubspot.com.
- QUOTE: Customer retention metrics are factors, or variables, used to measure the likelihood of retaining and attracting customers to your business. These units of measurement are used in various formulas created to determine the performance of business operations in a given period (...)
It takes time to see how effective your retention strategy is working. To do this, add up the number of customers you had at the beginning of a period, then all the customers that onboarded in between, then the number you had at the end of the period.
Subtract the number at the end from the newly acquired, and divide that solution by the number of customers you had in the beginning.
If you have a relatively small customer list, semi-annual or annual tracking will suffice.
Retention Rate Formula
Customer Retention Rate = (Customers at the End of the Period) - (New Customers Acquired) / Customers at the Start of the Period
- QUOTE: Customer retention metrics are factors, or variables, used to measure the likelihood of retaining and attracting customers to your business. These units of measurement are used in various formulas created to determine the performance of business operations in a given period (...)
2023b
- (Paramita , 2023) ⇒ Pragnya Paramita (2023). "3 Ways To Measure User Retention." In: amplitude.com.
- QUOTE: The three main ways to measure user retention are Return On retention, Return On or After retention, and Return On (Custom) retention. How you measure retention depends on your product, business goals, and customers’ usage patterns.
2023c
- (FullStory, 2023) ⇒ FullStory. (2024). "User Retention Metrics 101: Measure & Analyze Your Customers." In: www.fullstory.com.
- QUOTE: In order to calculate your customer retention, you first need to collect some basic data. Begin by adding up the total number of customers at the beginning of a given period.
Next, add up how many customers were onboarded during that period. Finally, add up how many customers were at the end of that period.
Then, subtract onboarded customers from those at the end and divide the total number of returning customers by the total customer number at the start of that period and multiply by 100 to get a percentage. This percentage is your customer retention rate.
Customer retention = (customers at end - customers onboarded) / (customers at start) * 100
- QUOTE: In order to calculate your customer retention, you first need to collect some basic data. Begin by adding up the total number of customers at the beginning of a given period.