AARRR Model (Part 3) - Improving Retention

The AARRR model was proposed by Sean in his book Growth Hacker, which mainly includes the above five important links. This article mainly talks about improving retention.

One sentence definition

Will users continue to use our products?

User performance at this level

Duration of use after first use

Operational Strategy

Conduct targeted analysis on process issues and then come up with strategies

Corresponding data monitoring

1. Retention rate 2. Churn rate

Next-day retention rate: (number of new users on the day who used the product on the second day) / total number of new users on the first day

Day 3 retention rate: (number of new users on the first day who used the product on the third day) / total number of new users on the first day

Retention rate on day 7: (number of new users on day 1 who used the product on day 7) / total number of new users on day 1

30th day retention rate: (number of new users on the first day who used the product on the 30th day) / total number of new users on the first day

Daily churn rate: (number of users who logged into the app on the day of the statistics but did not log into the app in the following 7 days) / number of active users on the day of the statistics

Weekly churn rate: (number of users who logged into the app last week but not this week) / number of active users last week

Monthly churn rate: (number of users who logged into the app last month but not this month) / number of monthly active users last month

Introduction

Peter Drucker once said: The purpose of business is to create and retain customers.

Research shows that for every 5 percentage point increase in user retention, profits will increase by 25 to 95 percentage points. Conversely, this means that user churn will result in huge losses.

The longer you retain users, the better you understand their needs and desires, and the more you can provide them with personalized services and advertisements, which will naturally make more money from them.

Another benefit of a high retention rate is that it can make your word-of-mouth and viral marketing more effective, because the longer users use your product, the more likely they are to talk about it and even recommend it to friends and others.

The most fundamental point to retain users is to provide high-quality products or services that can continuously meet their needs or make them happy, making the products or services indispensable to them.

Retention can be divided into three stages: initial, mid-term and long-term.

1. Initial Retention

The initial stage of retention is critical because this stage will determine whether users continue to use or purchase a product or service or become “dormant” after using it once or twice.

You should decide how long your product’s initial retention should be based on the product’s industry standards and your analysis of user behavior.

There is an advantage to early retention. Research shows that the more value users get from a product at this stage, the more likely they are to use it long term. And there are often many opportunities to improve the user experience at this stage.

The initial retention phase is essentially an extension of the activation phase. You can think of it as ensuring that users are actually active, rather than just taking a look and then losing interest in the product.

For this part, you can go to the previous article - "Activating Users" to review relevant strategies. Continuously optimizing the new user experience and allowing users to experience the core value of the product as quickly as possible are the two most important strategies at this stage.

2. Mid-term retention

1. Let users develop usage habits

Once users pass the initial retention stage, they enter the mid-retention stage. At this time, the novelty brought by the product begins to fade. To retain mid-term users, the core task of the growth team is to make the use of the product a habit and let users gradually gain satisfaction from the product or service. In this way, users will continue to use your product or service without encouragement, because it has become an integral part of their daily life.

In general, the core goal of mid-term retention is to allow users to develop the habit of using the product, thereby consolidating their loyalty to the product.

Daily active function: Daily active function refers to cultivating user habits through some methods; common methods include the sign-in function of various products, the first win reward function of game products, the daily energy acquisition function of Ant Forest, etc., all of which stimulate users to use products from the dimension of nature, so as to obtain monetary or spiritual gains and retain users.

2. Improve practical and experiential rewards

A principle that applies to most types of products is that increasing the value of rewards in the eyes of users can lead to greater retention. To make a product or service more habit-forming, the growth team should experiment with offering users a variety of rewards and encouraging them to take actions to earn them. The more actions users take, the bigger the rewards, and the greater the value of the rewards in their eyes.

Rather than looking at rewards in terms of money or money saved, teams should experiment with rewards in terms of product experience. In fact, some of the most habit-forming rewards are intangible.

In addition to offering users special offers and discounts, there are three other rewards strategies worth noting.

1) Brand Ambassador Program

2) Recognize user achievements

3) Personalization of customer relationships

3. Control the rhythm

Promising users that new features are coming soon is a very powerful retention bait. Telling users that new features or products will be available soon and what benefits they will get can effectively induce users to keep using the product, but you must control the rhythm.

3. Long-term retention

At this stage, the role of the growth team is to ensure that the product continues to bring greater value to users. The team must experiment with various methods to continuously improve the product and help the product development team decide when to upgrade existing features or launch new features. The most critical part of this stage is to make users constantly realize the indispensability of the product.

1. Enrich product content and improve product functions

(1) Optimize existing product features, push, and reward repeat use; (2) Launch new features regularly over a longer period of time.

It is extremely important to strike a balance between the two.

Deborah Viana Thompson, Rebecca Hamilton, and Roland Last note that cramming too many features into a product often hurts long-term retention because “adding many features to a product in an effort to maximize choice can ultimately reduce customer lifetime value.” They conclude that “companies should consider having more products with limited but more specialized features, rather than trying to pack every possible feature into one product.”

Growth teams can conduct experiments by providing users with product prototypes or trials to evaluate whether proposed new features are attractive.

2. Continuous user guidance

As users become more and more proficient in using the product, they should be guided to start paying attention to features they have never used before and new features that have just been launched. This is a gradual process, and users must first master the old features before they can start learning new features.

You can use the [User Growth System] to guide users.

The user growth system reflects the product's expectations and appropriate guidance for user behavior, and provides certain incentives for user behaviors that are beneficial to the product; while harmful behaviors are punished accordingly. At the same time, the user growth system can increase user stickiness and improve user retention rate.

Common user growth systems include points system, level achievement system, membership system, medal and title system, etc. We can flexibly design the user growth system according to product characteristics.

The user growth system can encourage user behavior and make users feel recognized. It can also provide appropriate feedback of recognition to users on their behavior in the product, motivating users and forming a positive cycle.

3. Resurrecting “Zombie Users”

The first step is to investigate why users are leaving in the first place. The simplest way to do this is to interview users who have canceled or stopped using your product and ask them directly why they left. This will help you figure out if the reasons people are leaving are controllable or solvable.

The team should try to win back users by sending them emails or targeted ads that remind them of the product’s “aha moment” or the core value of the product that attracted them in the first place.

Most importantly, you need to experiment with the wording, frequency, and duration of your messaging to ensure that your request to “come back” doesn’t annoy or further alienate your users, or you’ll simply make them think less of you and completely destroy any hope of winning them back.

4. Retention methods suitable for all three stages above

1. Event Operation

Activity operation is an operational means to achieve explosive effects by guiding user behavior in the short term, thereby achieving long-term product goals.

For example, Bilibili’s incentive plan for financial creators will encourage financial creators to produce more high-quality content and gain more user attention in the short term; in the long run, the platform will have more high-quality financial content in stock, and content producers will have more fans, gradually realizing Bilibili’s long-term product goal of going beyond the circle.

2. PUSH

PUSH is an important means for products to continuously reach users and recall lost users. PUSH needs to pay attention to the frequency, time and content of push; the push frequency cannot be too high, which will cause users to be bored. The time of push is generally in line with the user's product usage habits, such as when users just get up in the morning, commute, eat at noon, and browse information products before going to bed; of course, if the content is immediate and users will also care about it, it can also be pushed immediately, such as the latest news on the epidemic.

Because push notifications are mainly text-based, an eye-catching title and a topic that users will care about are very important. The content of the push notifications also needs to be refined, and the title and topic should be continuously optimized to increase the user opening rate.

3. Strengthen user investment and increase "stored value"

Strengthening user investment means using some methods to precipitate user behavior on the product so that users become dependent on the product. In this way, even if competing products emerge, users will not easily leave the product.

Common methods include the following:

• Time investment : Through phased tasks, users’ time investment is strengthened, making it difficult for them to give up halfway, such as Taobao’s stacking cats and Pinduoduo’s order cancellation.
• Monetary investment : Through annual membership/monthly membership, etc., strengthen the user's monetary investment and increase the user's loss when leaving the platform
• Content investment : Through the accumulation of UGC content, users’ content investment is strengthened, such as Weibo/friend circle/note products. Users accumulate a lot of content while using the product, so it is not easy for them to leave rashly.
• Emotional investment : By guiding users to invest their emotions, they can generate emotional investment of spiritual sustenance, such as pet products, NetEase Cloud Music reviews, etc.
• Social investment : Strengthen users’ social investment by forming stable circle relationships, such as social platforms such as WeChat. The stronger the social relationship, the stronger the user’s dependence on the product.

Author: Ju Yuejisan, an Internet operator, wants to bring you the "aha moment" on your road to operational growth.

Source: WeChat official account: "Operator's Growth Notes"