Revenue retention is down to people paying for your product. User retention is about them using it. 

Revenue is too chunky a measure to do anything useful with.  If you have monthly subscriptions, you’ll get one data point a month. Yearly contracts only make this worse.

If people don’t use your product, they might still pay you. But only because they forgot to unsubscribe—a dangerous place to build a business. A much better place is when people derive incredible value from your product and want to give you money for it.

User retention is much more nimble. 

You can measure it every time someone uses your product. That’s a lot more data. 

I don’t recommend blind tracking all user activity, too much noise. Measure meaningful activity, more signal. 

Figuring out what ‘meaningful usage’ means in the context of your product takes work. What's important is that your measure is predictive of long term usage. 

The whole point is that the people who use your product derive value from it. This value is what drives your revenue.  

If people stop using your product, then it means they no longer deriving value from it, and they’re probably going to stop paying for it.


Let me know what you think. These Hey posts are thoughts-in-progress, they're meant to be conversational. Replies to this email go straight to my inbox.