What is Retention and why is it important for Businesses?

Abdulsamod Balogun
4 min readApr 26, 2021


Photo by John Schnobrich on Unsplash

Okay. Let’s take a step back now. Take a look at the content in your content calendar and library. Can you tell what is predominant in the range of content that you’re creating?

If you’re a SaaS business, you’ll discover that most of your content strategy is directed at attracting new customers.

It is about increasing the awareness of your product and getting more people to experience your product and potentially converting them into paying customers.

After then, what comes next? Ask some marketers and all you’ll hear is crickets.

Indeed, acquiring a customer is only half of the hurdle. Keeping them around such that they become repeat customers and advocates is the other half.

In the past week, as part of my Growth Marketing Minidegree programme with CXL, I zoomed through the retention course and took some notes.

Although the course is largely focused on SaaS, the content is quite detailed and insightful. There are a bunch of important strategies marketers can adapt.

As a side note, it’s worthy to mention that I completed my Growth Marketing Minidegree final exam last week. It has really been a long and tough ride. In my final article, I’ll highlight my key takeaways from the whole programme and specify the courses I found most valuable.

So, let’s get in.

What is Retention?

Retention means different things for different businesses.

For SaaS companies, retention is equal to how many customers come back to perform the desired action, and for how long. For eCommerce, retention is the total number of repeat purchases.

For a B2B business, retention is equal to the number of repeat purchases and engagement.

Why is Retention Important?

In Val Geisner’s words, retention trumps acquisition. I believe this is contextual though.

Most SaaS companies use a free or low-touch customer success business model to acquire as many people as possible. Here is how it works:

Businesses with a freemium business model give away a fraction of their product for free, as an acquisition tactic. If the user derives value from the free product, they are poised to think that they can derive even more value from the product by purchasing a paid version of the product.

In contrast, for an eCommerce business, an average user does not typically realize the value in their first visit. More often than not, there are many preceding touchpoints. They need to come back multiple times and attempt to install or set up the product in some way in order to actually realize any value. This concept can be better understood by digging into attribution.

Also, most users are unlikely to become paying customers until after 14–30 days of frequent usage, or at the end of the trial period.

Getting someone to buy a sneaker from your online store is no easy task, but most users who visit an eCommerce store are visiting with a clearer intent, and the risk/gain equation is fairly simple when it comes to buying commodities.

The value of retention

The biggest user drop-off happens during the first week. In fact, over 65% of new signups will stop using a SaaS product within the first week.

So, in order to keep as many of that remaining 35 % of users, you need to think creatively and strategically about how you’re going to ensure your customers come back again and again.

Most SaaS apps, depending on the industry, retain between 6–20% of their users after 8 weeks. And after that, it is usually easier to keep them than getting new users to convert.

This means the acquisition process crosses over into retention, which means you can actually lower your Customer Acquisition Cost (CAC) and increase your lifetime value, by improving your retention.

You want your lifetime value to be 3x higher than your CAC.

How do you improve retention?

The most important part of retention is what happens between days 1–7.

Opposite to what many think, retention cannot be improved by spamming users with push notifications.

You will not be able to bring users back if you rely solely on email or push notifications. Remember, it is about psychology and delivering value to your users.

One important note: Don’t assume anything. What your users consider valuable in your product is definitely different from what you or your founder consider valuable. This is why improving retention starts with talking to your customers.

Try to establish a behavioral pattern as quickly as possible so that you can get your product integrated into your customer’s day-to-day routine.


Retention is super important for any business. It can significantly help you increase your customer lifetime value.

It is important that you figure out how to establish a behavioral pattern very early and actually provide value to your users so that you’re assured to see them come back.



Abdulsamod Balogun

Communications and PR Lead, Leonine Investment Services Limited. Enthused about Technology, New Media, Finance and Leadership.