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The One Growth Metric that Moves Acquisition, Monetization, and Virality
- Since improving retention drives monetization - meaning you make more money over a designated period of time - it also shortens your payback period.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
2. Retention improves monetization: - When it comes to monetization, two important things happen with improved retention - 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
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
- It isn’t just about retaining more users, it impacts every facet of your growth model and has multiple layers of impact on the health of any business. In fact, retention is one of the key factors that determines the long term success of any startup. Retention will make or break your company.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
4. Retention accelerates payback period: - Payback period is the time it takes to break even on the cost to acquire a customer. It also determines how fast you can start reinvesting in acquisition to fuel growth. Improving retention can help shorten your payback period to grow faster.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
- Spotify offers a great example of how retention can improve monetization for freemium models. When you sign up for Spotify for free, they serve you ads, many of which target you to upgrade to the premium ad free service. Let’s walk through two different scenarios demonstrating how improvements in retention impacts monetization for Spotify.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
- Pinterest is a prime example of a fast growing company that relies on UGC as their main acquisition channel. When a retained Pinterest user creates a new pin and adds descriptive tags, Google indexes the pin. When people search and land on it, this experience introduces new users to Pinterest, and some percentage of those people sign up. Some per... See more
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
- In 2014, my team and I had been digging into retention for our new HubSpot Sales product. The more we unearthed, the more I realized how critical improving customer retention was to blowing out the product’s growth story.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
- There is a lack of understanding why retention is the priority. Without understanding this, people end up working on the wrong things and missing the biggest opportunities.
Brian Balfour • The One Growth Metric that Moves Acquisition, Monetization, and Virality
1. Retention drives acquisition: 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 content.