Mastering User Retention like Amazon, Spotify and Co.

How to Leverage Your Product Data with the right Retention Metrics

Dennis Meisner
Product Coalition
Published in
9 min readDec 9, 2020

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(Image edited from unsplash.com)

A stunning 93% of Amazon Prime members renew their subscription after the first year. After the second year, this number goes up to an incredible 98%! And Spotify focuses more and more on the podcast business after learning that this is one of the company’s biggest drivers for retention. Netflix, Amazon, Spotify and Co. are masters in retaining their users and have managed to grow a loyal customer base that guarantees stable revenue streams.

For these businesses, retention models are not just a way to measure the success of their product and business initiatives. They are an essential tool to inform their future strategy.

In this post, I will explain how we can follow the example of these companies by using different churn and retention metrics to measure success and inform our future business strategy.

Retention > Acquisition

Acquiring new customers is significantly more expensive and cumbersome than focusing on retaining the ones you already have. Thus making sure that new users continue using your product is vital. No matter whether you’re working on an online marketplace, a mobile app or a social media platform; Retention is the holy grail for almost all (online) business models.

Retention is the single most important thing for growth. Alex Schulz, VP Growth Facebook

Retention metrics help to understand whether users come back to our product. When thinking about retention, we first have to define a critical event that users have to perform in order to be counted as retained. Such an event could for example be making an order on an e-commerce site or playing a song in a music subscription service.

Retention metrics can then be used to quantify how many users perform this specified action and thus qualify as retained users. Users that did not perform that action in the specified time window are considered to be churned.

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