user retention rate

User retention rate should be the first metric you want to improve. You ask why? If you don’t have endless resources, you have to make money and be a profitable company. To be a profitable company, you need to gain new customers.

However, another critical point that will protect and increase your profitability rate is to retain your existing users. It doesn’t make much sense for new customers to join your company when you’re constantly losing customers.

Consider a ship taking on water. Some of the sailors try to empty the water with buckets. But the ship continues to take on water. Do you think this ship, which has taken water, will be able to dock at the port safely? In a single scenario, this seems possible. Someone has to plug the goddamn holes!

It’s like having a successful company. You have to plug those holes where you lost customers one by one.

Shall I tell you another positive aspect of your high customer retention rate? Retaining your existing customers is much cheaper than acquiring new ones. Because you spend thousands of dollars on your marketing efforts to gain new customers.

In addition, the existing customers provide you with many benefits without you realizing it: they become advocates of your product, they help you to improve your product constantly by giving feedback, and sometimes they help you gain customers by making nice comments on social media platforms.

If we look at what I’ve told you, a high user retention rate is giving good signals for your company, while a low user retention rate gives bad signals.

So, how about 3 recommendations that will increase your user retention rate? At the same time, we will prevent you from reducing this rate, which is very important for your company, by talking about 3 mistakes you should avoid! Shall we begin?


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What is the User Retention Rate?

user retention rate

User retention rate is the percentage of users who return to your app or website after their first visit. There are several ways to calculate this, but the most common is to take the number of returning users in a given time period (30 days for example) and divide that by the total number of visitors in the same time period.

So if you had 100 unique visitors in January and 20 of them came back in February, your retention rate would be 20%.

There are a number of factors that can affect your retention rate, both positively and negatively. On the positive side, things like great content, a user-friendly interface, and engaging features will keep people coming back. On the downside, things like bugs, crashes, and poor performance will drive people away.

Increasing your user retention rate can be difficult, but it’s worth it. Not only will it help you keep existing users happy, but it will also help you attract new ones.

How is user retention calculated?

Customer Retention Rate Formula = ((EC-NC)/SC)*100, where:

EC – number of customers at the end of a period
NC – number of new customers in this period
SC – number of customers at the start of that period

Let’s say you launch a SaaS product. On May 1, you had 1000 users. By May 30, you had 500 new users, but 200 users stopped using the product. So, at the end of a period (a month in our case), you have 1300 paying customers. Let’s calculate the retention rate: ((1300-500)/1000)*100=80

Do you want to know more about calculating the user retention rate, visit this informative post!

What is a good customer retention rate?

User retention rates vary for each industry. For example, while the retention rate of X in sector A can be described as good, the same ratio in sector B can be described as bad.

The highest and lowest rates of user retention can be determined entirely according to the internal dynamics and potentials of the sectors.

3 mistakes and 3 improvements affecting user retention rate:

1) Customer loyalty programs are an incentive for your customers to rebuy or revisit your product or service.
2) The positive performance of your customer support team can win the hearts of your customers.
3) Customizable themes allow your customers to connect with your product. Thanks to customizable themes can rise your user retention rates.
4) User onboarding processes should be perfect. A bad start can prevent your users from seeing the benefits of your product.
5) Inadequate communication negatively affects the perception of your brand and product. Remind them of yourself by communicating with your customers.
6) Continuously improve your product by asking for feedback. Otherwise, your competitors may be your customers’ new visiting places.

3 Great tips will increase your user retention rate!

There are many methods you can use to improve customer retention. Thanks to these methods, we will ensure that your users choose you again and again! 🐝

Give them a reason: Customer Loyalty Program 😻

user retention rate

Have you thought about rewarding your users? You don’t need to look for big reasons. Just give your users a simple reason to re-engage your brand and make them buy from you again and again.

For example, divide your customers into various segments and define a certain discount for each segment group. You can specify a different discount reason for each segment. For example, you can offer a 5% discount to your users who have been actively shopping from you for 1 year. Or you can define a special discount for users born in the current month.

This is exactly why I asked you to segment users. A purchase incentive that will work in one group may not work in the other.

You can easily reach the target customer group by making these offers via e-mail. Of course, the language you use and personalized emails will positively affect the performance of your loyalty program.

The logic in this method is quite simple. Reward your customers. Reward them so they buy from you again. In some cases, you can define discounts for your users who meet certain conditions. For example, you can set rewards for your users who share their purchases from you on social media or for your users who leave comments on the App Store.

Make sure the condition is fairly simple and users can easily fulfill it. Nobody wants to do a complicated operation. Even if they get a discount in the final.

Develop your lacking sides in your business 👩‍💻

User retention is often thought of as a non-modifiable metric. However, it is important to understand that there is always room for improvement when it comes to customer support and success. By understanding the errors that can lead to low user retention, you can easily change your own performance.

A common mistake is failing to provide adequate customer support. This may be related to understaffing, insufficient training, or insufficient budgeting within your company for customer support. This can lead to frustration that customers may later give up.

To avoid these mistakes and increase your user retention rate, make sure you have adequately trained your customer support team and provide them with the training they need to resolve customer issues effectively.

Add customizations that will make your customers happy in the processes 🤓

The first step to achieving a high user retention rate is to make sure your customers are happy. To do this, try customizing all steps of your product or service and offering themes tailored to their needs.

For example, you can develop a feature where they can change the website design as they wish. (Like dark mode on Twitter or different themes on AnnounceKit.) Or when they visit your site again, you can address them by name and say “Welcome, Hakan”. Even remembering and celebrating birthdays is enough to establish a bond with your users.

user retention rate
As AnnounceKit, we are very happy to work with On the right, they changed the area where they announced their updates to suit their brand identity. The colors look really cute. This is exactly the customization I’m talking about!

Try to collect all the information that will customize your customers’ experience while they are still signing up. Then use this information to create a unique user experience for them.


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3 Mistakes can reduce your retention rates 👎

Some mistakes can result in lower user retention rates. But these mistakes can be avoided and let’s examine what we can do to achieve better results!

The user onboarding process should be perfect! 👌

user retention rate

The first thing you need to do is ensure that your user onboarding process is effective and efficient. To do this, you must ensure that the information you provide to your users is relevant to your product and is easy to understand. Some complex onboarding processes cause users to leave the product before they even start using it.

The second thing you need to do is make sure you have a clear path for users through the onboarding process. This means they need to be confident in their ability to complete tasks and understand how everything works before proceeding.

Finally, make sure your onboarding process includes some kind of feedback mechanism so users know if they’ve successfully completed their task or if there’s anything else they need help with.

When they have questions about your product, you can quickly answer these questions and give them a great user experience. They will have a great impression of your product when they need you again.

An inefficient user onboarding process causes your user retention rates to decrease rapidly.

To improve your user onboarding processes you can check out our article which is called “SaaS Onboarding Best Practices to Improve Customer Success

You can’t bond with your customers without strong communication 💔

If you don’t communicate with your users regularly, you risk driving them away from your product. This is because users are not aware of new features and updates, which reduces product adoption.

One of the biggest mistakes startups and businesses make is failing to communicate effectively with their users. This lack of communication can have a number of negative consequences, including:

  • To drive users away from the product
  • Reducing product adoption rates
  • Missing valuable feedback

But most importantly, they may not want to visit your site again. Even if your product is exactly what they need, they may not want to use your product when they need it. Because they even won’t remember of your product or service.

It’s important to make sure you’re communicating with your users on a regular basis. By staying in touch with your users, you should keep them updated on new features and developments that will help them interact with your product.

Ask for feedback or give up on your customers

user retention rate

The third big mistake that leads to a poor user retention rate is not asking for feedback. User feedback is critical to understanding how your product is being used and what improvements can be made. However, many startups and businesses are not able to collect or effectively use this feedback.

It’s important to make sure you ask the right questions to get useful feedback that can be used to improve your product. Additionally, you need to make sure that this feedback is acted on in a timely manner. Otherwise, users will feel their concerns go unheard and will likely give up.


Here you go — 3 mistakes that could lead to lower user retention, and 3 improvements you can take to start seeing results.

The points I mentioned may not be 100% correct method for every company, product, and sector. However, you can usually examine these areas to get started and try to improve them.

With a little effort and dedication, you will be able to keep your users happy and engaged for a long time. 🥇


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Manage your product announcements from a single place and easily distribute them
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