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How To Keep Your Users | Startup School
- Flattening cohort retention curves are predicted as a critical indicator that a product resonates with users and will eventually grow into a large, profitable customer base, while failure to flatten suggests a lack of product-market fit.
- Historical data from Google Photos is cited showing retention curves flattening between 20% and 40% depending on country and device, with a specific prediction that 20% of the global population would eventually use the service.
- Risks of data distortion include widening retention measurement periods (e.g., moving from weekly to monthly), selecting trivial actions like app opens, or relying solely on payment metrics, all of which may mask declining user value or premature churn.
- Founders are warned that targeting the wrong customer demographic, such as Gen Z, can result in poor retention despite high acquisition volumes, necessitating a re-evaluation of the target audience.
- Plans for improving cohort performance include slicing data by dimensions like country or company size, investing in onboarding and activation, and leveraging network effects as the user base grows denser.
- Product success is defined by "holy grail" upward-trending curves where usage increases over time, or a "layer cake" structure featuring thick layers of revenue from older cohorts, both signaling strong long-term growth.
- If retention curves fail to flatten, the definitive action required is to directly engage with customers to understand their needs and product deficiencies.