1. Retention

Retention refers to the users who continue to show interest in the products, contents, or websites from their new “activation.” Retention is the most important phase in AARRR because it is crucial to keep new users to continuously experience the core value of the product. New users who do not feel the value of the product after their first few experiences will bounce. It is crucial to have a knowledge about cohort analysis in order to find out the retention rate.

2. Cohort Analysis

2-1. Definition

Cohort analysis is a type of behavioral analytics where you take a group of users based on their shared traits , and analyze their usage patterns based on those traits.

3. Types of retention

3-1. Classic Retention

Classic Retention(N-Day retention) refers to the proportion of customers who return to the product on “Day + N.” The standards of measuring this type of retention depends on the kind of product. For example, Whatsapp would measure classic retention according to daily users since people use social app everyday. However, Logitech would measure classic retention according to monthly users or longer since people do not buy electronics daily, but more likely over the month.

How to calculate retention rate

Let’s take a look in the case of Whatsapp. Users of this app would need to access the app in order to chat with others everyday. So we will assume that the users are using the service based on whether they visited the app or not.

Ex) In June, the users A, B, C, D, E started using the service. And let’s assume that these are the logs of those users from June 1 - 5.

The table below shows the summary of the table above. The number of users who visited the app on June 2 would be 3 out of 5 people, which is 60%. This percentage is a retention rate.

Shortcoming of Classic Retention