Every time I see anyone talk about retention, it's always from a product sense. But if we were being honest with ourselves, Marketing has just as much impact on retention as product does. So I'm going to go a little deeper in this article about retention, but all of it from the lens of how Marketers can and should be using it.

Here’s what we’ll cover today:

It’s 2025 and yet I still have to share: retention is the single best metric to represent how your business is going to perform. If you have great retention then many other problems can be solved, but without retention it’s nearly impossible to make the other issues go away.

It’s why investors care so much about it because they’ve seen time and time again that it’s a great metric for assessing PMF and to ensure their investments are worth investing in.

It’s why founders / leaders care so much about it because it’s how they know their entire organization is delivering value to end users.

Let’s look at a mathematical example of why retention is important:

Let’s say you’re a business where your CAC = 1st order value of a customer. Essentially, the customer’s gross margin pays for what you spent to acquire them. But LTV doesn’t account for over head costs so you need the customer to continue delivering value beyond the first order to pay for those additional costs. You pay up front for a customer and then they give value back to your business over time. That’s how most successful businesses survive.

Now, if you have really poor retention (known as a leaky bucket), the cost per acquisition is never offset, and so you can never make up for it. Inevitably you can’t reinvest in the business sustainably and the business won't be able to grow.

From a customer obsessed point of view (which is the best view), retention is important because it is a proxy for how much value your customers are getting from you. You want people to love your product and use it continousyl. Retention is how you actually measure this complete output of your business from Marketing to support to the product and pricing is captured through retention. It's the single most holistic metric.

So, why is just hearing it from a product perspective undermine Marketing’s impact?

Example

Let’s look at the chart above and see that based on 2 different sources of how users are acquired you plot the retention of users. Immediately you see that Channel 1 has a better retention than channel 2. Assuming that the product experience is the exact same for both, there’s a reason that Channel 1 has better retention… it’s bringing in better quality users where the product resonates with them. It’s a pure Marketing play that leads to better retention.

So Marketing is important because the quality of users that you bring in is a good predictor of how much they're going to retain. Are you bringing in the right type of users? Are you bringing in users at the right stage of the journey? That's all Marketing.

For example, you're acquiring users from Google Search who are very high intent and they've searched for a specific product. You might have higher retention through that channel compared to if you invest in Meta and people are just shopping around. Another example is word of mouth and referrals. We know that the quality of retention from referrals and word of mouth is often significantly higher. By investing in the right channels, you will have better retention, higher LTV, and therefore a better business.

Now let’s first dive into how you should define retention

The first thing you have to think about is “What is your most important metric?” (Read How to pick your Northstar for more detail)

It can be anything from sign-up to a lower funnel metric. In Uber's case, it was take a trip. It's the action that triggers when we want to start tracking the retention of a user. Now that we’ve picked that metric, we will use that metric to measure activity / retention over time. In Uber’s case we would plot retention based on when users would take future trips.

Note: If you're Meta or Snapchat (more of a social use case), it could just be interacting with the platform. That’s because they care about activity on their platform to sell ads so it’s a different business model. Either way, keep it consistent across time so that you can plot retention correctly.

Things not to do when defining retention:

So now that we’ve defined retention, how do you analyze it?

Before we get into how to analyze retention, it’s important to understand how the metric is calculated. We can actually define retention in two ways:

Point in time retention

Point in time retention looks at what a user did on that exact day.

Let's say you took your first trip with Uber on January 1, and we want to know your 30-day retention. We’d look at how many people take a trip exactly on their 30th day.

Point in time retention is more useful for active products with more frequent use cases. This way you can see when people drop off when you’re expecting a daily frequency.

Unbounded retention

Another way to define it is what's known as unbounded retention, or cumulative retention. Instead of looking at how many people take a trip on exactly their 30th day, we look at how many take a trip on or after their 30th day.

It’s essentially a cumulative sum of the retention from that day forward (one of the rare times a cumulative sum gets smaller). The reason you’d want to define it this way is because it’s a good at spotting patterns in churn. Retention is the inverse of churn and this will tell you how many people are still retained after this point (or how many people churned).

There’s a debate about which version of retention is better between Point in time and Unbounded, but the real takeaway is that it tells you the same thing. In both cases it helps you identify dropoffs and makes you wonder how to make retention look better.

Finally, the best visualization for retention is what's known as a cohort chart. On the vertical axis, you've got the cohort by sign-up date, and on the horizontal axis, you've got the retention over time.

This chart helps you compare retention between cohorts that signed up over different times. For example, you can compare the 4-week retention from the January cohort to the February cohort and see if it's higher or lower. This helps you determine are there seasonal differences between retention:

It's by far the best way to observe retention.

Once you have your cohort chart, what you want to do is look at the biggest drops in retention.

Those are the points where customers are falling out of your product. Then you’ll have to double click into WHY the drop-off is happening. It might be experience, pricing, customer journey, or something else, but if you didn’t spot the drop in retention you wouldn’t know there’s a retention issue which is why analyzing retention is huge.

Let's start with the journey of most consumer tech apps, which is performance Marketing. You've got many different channels and campaigns, and depending on your attribution scheme, let’s assume you've got the journey tracked.

You should now cohort your users based on many different attributes:

Anything you can think of you can start to cohort users and then plot retention by one of these cohorts.

What you can then observe is retention by these broken apart cohorts and see where it would be smart to invest or optimize.

Let’s dig deeper as a performance Marketer. As I mentioned before, retention is a huge input into LTV, so, what you really want to do as a potential performance Marketer or growth Marketer is look at the LTV by channel. LTV by channel with be driven by AOV (average order value) and retention so you use retention as a component of LTV and plot retention by channel.

"Wow, the people coming in through these channels have higher retention."

Then you can double-click and double down investments. Double. Double.

Here are 3 followups once you’ve analyzed retention:

What about other types of Marketing?

So let's look at an example where you have really poor activation rates (activation, by the way, is almost the number one driver of retention). If your customers don't activate, they don't ever have long-term impact to your business, so if you see really strong drop-off rates in your activation, that's one way you can come in with Marketing.

You can use life cycle Marketing, discount Marketing, or promotion Marketing to try and boost that activation rate.

Finally, on going lifecycle comms and churn prevention are 2 other situations where Marketing can influence retention. Continuing our Uber example, let’s say a rider takes a trip and has a really poor experience (the driver took too long or the driver canceled). Now Marketing can come in and again use the same tools we talked about to say "Hey, you've had a bad experience. Here's either a discount”

Other examples of ways to improve your retention through Marketing:

Lastly, a great way to use retention is as a political tool within a company. This is a bit of an interesting one that not many people talk about, but it's an opportunity to bridge the gap with product teams and really forge a collaboration.

At the end of the day, product teams are really being scrutinized for retention. There are usually expensive teams. Just like Marketing. And so if you can observe and know what your retention curves you can identify opportunities to go work with product teams and really create a better product experience for your customers. Because at the end of the day, your customers don't know that it's a product page vs a Marketing page. They just see one experience. And so there's a secondary benefit to understanding retention and using it, which is forging this relationship with product.

This is how Marketing can really influence retention.

While I’ve shared some ways to use retention as a Marketer, here are some common mistakes Marketers make:

Now, onto a beautiful case study of the impact of focusing on retention.

If you look at the chart above, ‘21 was a pretty flat year for DAU growth at Duolingo. And then something changed.

First, they started measuring the right metrics.

They came up with 8-10 different measures of retention rates and used that to identify where to push. Then they went all in on Marketing.

In 2020, they hired their legendary head of Social Media Zaria Parvez. In addition, in 2021 is when they introduced the Duolingo Streak.

That was purely a retention driver (through both Product + Marketing). What they were looking for was to bring back users in a way that felt fun, gamified, and authentic to the app, but at the end of the day, they wanted higher active users and they wanted higher retention.

By focusing on retention, Duolingo increased their DAUs 450% and reduced churn by over 40% over 4 years. Wow!

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Here it is: How Marketers can turn data into credibility