CLTV = ARPU * Lifetime
Higher CLTV means higher
CAC you can spend
More sophisticated approach
It is THE ONE growth metric
that moves acquisition,
monetization and virality.
(This is important because if you improve retention, you’ll also improve the rest
of your funnel.)
As you retain more users,
those additional users take
more of the key actions that
accelerate acquisition, either
through sharing, inviting,
word-of-mouth, or creating
As more of those new users
retain, more are acquired -
improving retention sets off a
self-reinforcing cycle that
You can retain a larger
proportion of a cohort, and in
doing so, make more money
from that cohort within a
given period of time, and you
can increase the length of
time that a cohort
retains, increasing LTV.
As you increase retention,
monetisation, and LTV, you
can pay more to acquire a
customer. In doing so, you
can push competitors out of
acquisition channels, open up
new channels that were
previously too expensive, and
How retention drives acquisition - UGC for Pinterest example
How retention drives acquisition – Usage driven virality Loom
How retention drives monetisation
• The first 72 hours after acquisition
is the most critical, since it’s where
users get their first impression of
• Show new users the value of your
product and get them to the “aha
• Mid-term retention is about
forming, then reinforcing, your
users’ habits around your product.
• Eventually they won’t need
reminders to open the product,
they’ll keep coming back on their
• This final phase of retention is
about continuously improving the
product so it stays valuable to
users. And understand your users’
• Keep finding ways to solve their
problems by adding new features,
improving UI and UX, and fixing
Get your benchmarks
The most crucial ones to watch are: day 1, day 7, day 30, and month 6.
Track the Right Segments
These three segments are key:
Set S.M.A.R.T. Retention Goals
Create S.M.A.R.T. goals: Specific, Measurable, Attainable, Relevant, and Time-bound.
Test, Analyse, Repeat
Focus your efforts on where users drop off and become inactive
Test Analyse Repeat
Test your hypotheses, then analyse your results so you learn and improve.
Repeat until you see fewer uninstalls/drop-offs and more consistently active users.
Retention is a marathon, not a sprint.
Every failed experiment leads you closer to finding
the winning combinations that keep your users
loyal to your product.