Understanding Customer Stickiness and Key Retention Concepts

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 Hi readers 👋, I am up with a new blog. It's been a while since I've posted something but trust me with this blog you will grasp product concepts that will enhance your knowledge. So without any further adieu, lets get started.

Now let me ask you a question- Have you ever wondered why you keep going back to Instagram and scroll through reels inspite of knowing that it's not beneficial for you? This is simply because you are stuck to Instagram and they have built algorithms to stick you to the app and its features. 

Stickiness is a habit formation which is often measured formulaically as DAU (Daily Active Users)/ MAU(Monthly Active Users). The closer the ratio is to 1, the stickier your product is. 

A quick distinction-

  • Product Stickiness = how often users engage with the product features
  • Customer Stickiness = how emotionally or behaviourally users rely on the product

Related Concepts

Customer Loyalty: Loyalty refers to emotional connection towards a product. It can exist without a frequent use, like- I choose Starbucks even when I have other options.

Brand Advocacy- It is a kind of extreme loyalty. It can be in the form of testimonial( direct endorsements from the customer), referrals (promoting the product to others), UGC- User Generated Content (reviews, photos, videos, etc). Sticky products often lead to brand advocates.

Repeat Purchase- It is a stickiness x loyalty. Customers come to buy your product but the engagement can vary depending upon the type of the product.

CLV- It is the customer lifetime value which means the total revenue a company generates with its association with a customer. (This is a detailed topic but for now this definition can help you differentiate CLV from other concepts)

Customer Retention - It measures the percentage of users that continuously use your product. 

Churn - It is the inverse of retention. Sticky products = less churn = more growth. 

A quick distinction-
  • User Retention = refers to free or non-paying people using your product
  • Customer Retention = refers to paying members using your product
Value Proposition - This is why someone is using your product. The value that your product is providing to the customer to solve their pain-point. A strong value proposition helps to make your product sticky.

Customer Enagagement - It is the interactions that a customer initiates with your product. It is not just about interacting but relationship building with the product. If your product has good engagement, it will eventually enhance loyalty, advocacy and repeat purchase. 

Customer Experience - This is the overall feeling the customer has while using your product. You can say there is a direct proportionality of CX with retention, churn, stickiness and all the other concepts you read above.

That's all. Keeping it short and crisp. Hope you liked the blog :)

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