The emphasis on “going viral” at the expense of retention
could be killing startups.
“Rapid user growth followed by rapid user attrition is an indicator of unsustainable growth,” argues Jonathan Quint of Quint Growth.
Tech history is littered with examples of companies that started strong but couldn’t retain its user base and flamed out. The story is often the same: A campaign is rolled out to sign up as many new members as possible, with an incentive to those members to sign up as many of their friends as possible.
The product is new and exciting and the company experiences remarkable short-term growth. However, users eventually realize that the product didn’t really offer anything new to the table, or promised new technology didn’t really deliver. The problem can usually be attributed to the company’s technology not yet being ready to retain users.
“If your invites,” explains Quick of a company called Viddy where this exact thing happened, “have an acceptance rate that is quick enough, your monthly active user numbers will continue to grow even if you have zero retention past the first-use of your app/site. Growth of the high virality, low retention type is almost always unsustainable as the viral loops being exploited to attain quick virality eventually expire.”
This isn’t only emblematic of the tech industry. Among the most public and well-known examples of high-virality, low-retention failures are professional sports leagues. Millions tuned into Week 1 of the XFL, realized the produce sucked and never tuned in again, and the league died one year into its three-year TV contract. The old NASL set American soccer back several decades with its Cosmos-and-expansion-fee financial model.
There’s a fine line separating viral and virulent. Going viral is fine, but it’s meaningless without a plan to secure those users for the long haul. This is something FlockData can help you with.
With cluster and graph analysis, FlockData allows you to segment your customer base into cohorts, which allow you to determine which users are likely to churn. With that analysis, your organization can prepare strategies to cater to the customers likely to renew while gathering feedback to potentially retain those who are not.
As Quint simply states, “If you have high retention and no virality you will sustainably grow your user-base over time. If you have high virality and no retention you will not.”