How to improve retention through Marketing

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How to improve retention through Marketing

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:

1. Why retention is important (and how Marketing impacts it)

2. How to define retention

3. How to analyze retention

4. How to influence retention

5. Duolingo: A case study

Why retention is important (and how Marketing impacts it)

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

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