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Retention measures how long your customer stays actively engaged with your product or business.
The two key retention metrics are:
A product-market fit gives you a sense of how ready your product is for the market. It's a measure of revenue against the payback period and shows the percentage of users who value your product over a period of time.
When you have a product-market fit, you can:
A cohort is a group of users who experience the product value at about the same time.
A PM can look at data per cohort to see what numbers improved over time. This can highlight the value within your product that attracts and keeps your users.
The Activation Curve shows the number of users activated over a specific period of time.
Many early-stage companies have bad retention at the start. They can get customers in but haven't figured out the mechanics to keep them around. When the metrics start to improve over time, you generally have the concept of product-market fit.
Focus on new users and the initial experiences they have with your product.
To create a great first impression:
Target better users. Look at the channels users come through (targeted and organic). Measure each channel to find your ideal customer.
Kill features that don't provide enough core value. Use Firebase experiments to see how a rollout or a build is impacting retention metrics.
Change your model or your pricing.
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