How to move beyond surface-level metrics?
Sarah Tavel, General Partner at Benchmark, shares her expertise on market dynamics, user engagement and retention, network effects and the importance of identifying core actions for growth.
She provides a roadmap for startup founders to navigate their journey towards success.
Identifying Core User Actions
‘Core action’ is a term used to describe an activity that demonstrates users’ comprehension and utilization of a product’s value proposition.
Identifying this core action is crucial as it helps pinpoint areas needing improvement if users aren’t regularly engaging in this action.
The Challenge of User Retention
Once a company has identified its core action and encouraged users to complete it, the challenge then becomes retaining these users over time.
Without consistent user engagement, building an enduring product becomes increasingly difficult.
Leveraging Network Effects for Self-Perpetuation
Successful products often become self-perpetuating by leveraging network effects.
Each user interaction adds value for all users, creating a flywheel effect where increased usage enhances the overall experience, leading to further growth.
The Role of Growth and Re-engagement Loops
Growth and re-engagement loops play a vital role in making a product self-perpetuating.
These could be as simple as sending push notifications when someone interacts with your content or designing collaborative experiences that draw other users into the product.
Anonymity’s Impact on Retention
Anonymity can pose challenges particularly at the retention level in the hierarchy of engagement framework.
Pure anonymity lacks accruing benefits or mounting losses, making user retention more difficult.
‘I think a lot of people think about markets almost like these bodies of water…and I actually think that the most interesting markets you have to think of them like currents where there’s something happening in the market that’s creating this current where you can have like a plank of wood that you put on the river and it’s going to pull you forward.’ – Sarah Tavel
Strategies for Increasing Retention
Retention can be improved by tracking cohorts – groups of users who signed up within a specific period – and observing their activity over time.
Making it harder for users to leave by ensuring that the product improves with increased usage is another effective strategy.
The Advantage of Geographic Focus
Focusing on a specific geography while growing user numbers can help create a high-retention product.
This often overlooked aspect can guide users towards desired actions, preventing an unfocused product experience.
Importance of Activation Moments
Getting the activation moment right is crucial for guiding users when they first sign up for your product.
Focusing on leading people to this ‘aha’ moment repeatedly as a core action can significantly improve user engagement and retention.
Hierarchy of Marketplaces Framework
The hierarchy of marketplaces framework helps marketplace founders prioritize what matters most when starting or scaling their marketplace.
While Gross Merchandise Value (GMV) is important, not all GMV is created equal and focusing solely on GMV growth can lead startups down the wrong path.