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How to measure retention correctly with cohorts, tweetstorm edition!
Understanding how to calculate retention correctly is key to building an effective growth strategy.
However, it's not straightforward to measure - here is a step by step guide
https://pastel.video/blog/how-to-measure-retention-correctly-with-cohorts-step-by-step-guide-with-examples
Understanding how to calculate retention correctly is key to building an effective growth strategy.
However, it's not straightforward to measure - here is a step by step guide
https://pastel.video/blog/how-to-measure-retention-correctly-with-cohorts-step-by-step-guide-with-examples
Step 1: Get the number of signups in a specific month
Step 2: For these users who signed up in this specific month, calculate how many were active each month after the first month.
Month 0 has all users active by definition. For subscription products, measure how many users are still subscribed.
Month 0 has all users active by definition. For subscription products, measure how many users are still subscribed.
Step 3: Convert these to percentages of the original users in the cohort.
In google sheets it is easy to make this a separate chart that refers to values in the previous one.
In google sheets it is easy to make this a separate chart that refers to values in the previous one.
Step 4: Apply steps 1-3 to your other cohorts
You will notice that the retention rate between cohorts generally stays around the same.
It’s hard to increase retention! Now you can apply an average at each column and get a range of where the values level off.
It’s hard to increase retention! Now you can apply an average at each column and get a range of where the values level off.
Cohort retention benchmarks to aim for long term:
Consumer free products: 40%
Consumer subscription products: 50%
B2B selling to Small businesses: 60%
B2B selling to Enterprise: 90%
Consumer free products: 40%
Consumer subscription products: 50%
B2B selling to Small businesses: 60%
B2B selling to Enterprise: 90%
If the dropoff is in the first week or month, then activation and onboarding should be the priority.
If the dropoff is later on, then product work needs to be done to solve a more sticky user problem.
If the dropoff is later on, then product work needs to be done to solve a more sticky user problem.
That's it! Feel free to reply if you have any questions, I'd be happy to answer.
Read the whole post here: https://pastel.video/blog/how-to-measure-retention-correctly-with-cohorts-step-by-step-guide-with-examples
Read the whole post here: https://pastel.video/blog/how-to-measure-retention-correctly-with-cohorts-step-by-step-guide-with-examples
