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How to define a good retention metric for your product
- Retention is a critical concept in product management but often misunderstood, with many defining it incorrectly as a daily/weekly/active user metric.
- A good retention metric should focus on the value users derive from the product over time, not just their usage frequency.
- Defining retention based on natural frequency of use and value generation is crucial for a meaningful metric.
- Different products have different usage frequencies, so retention metrics should align with how often the problem your product solves occurs.
- Key actions that indicate value should be tracked to ensure the retention metric reflects meaningful interactions.
- Combining natural frequency of use with key value-generating actions creates a truly actionable retention metric.
- For ad-hoc products used infrequently, defining a retention metric may not make sense as building habits around them is challenging.
- Strategies for ad-hoc products include focusing on brand awareness or developing more frequently used products to drive retention.
- Properly defined retention metrics help evaluate habit-building features and gauge the product's effectiveness in solving user problems.
- Retention should be measured as an indicator of habit formation, not just for the sake of tracking metrics.
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