The Power of Good Retention and the Infinite Article

The Power of Good Retention and the Infinite Article

Retention is a crucial factor in measuring the success of any consumer-based business. It determines how well a company can keep its customers engaged and satisfied over a certain period of time. While the ideal retention rate may vary depending on the industry and type of business, there are generally accepted benchmarks for what constitutes good and great retention.

In Lenny's Newsletter, the author highlights the retention rates for two different types of consumer businesses. For consumer social platforms, a retention rate of around 25% is considered good, while 45% is seen as great. On the other hand, consumer SaaS (Software as a Service) companies should aim for a retention rate of approximately 40% for good performance, and 70% for exceptional results.

These benchmarks provide a valuable reference point for companies seeking to evaluate their own retention rates and make improvements where necessary. By striving to achieve or surpass these industry standards, businesses can ensure that they are effectively retaining their customers and building a loyal user base.

However, good retention is just the tip of the iceberg when it comes to maximizing the potential of user engagement. The concept of the "infinite article" takes content recommendations to a whole new level by leveraging artificial intelligence (AI) to merge and adapt content based on the reader's interests and interactions.

Imagine an app that dynamically generates an article as you read, constantly tailoring the content based on your preferences and how you engage with the material. This vision of the future requires AI to truly understand the reader's interests, which can be achieved by analyzing their highlights and notes. By incorporating these insights, the AI can create a seamless and personalized reading experience that keeps users engaged and hungry for more.

To bring this concept to life, it's essential to identify the low-hanging fruit and narrow down the initial product and market. This approach, known as a wedge, allows for a focused and manageable starting point. Tesla, for example, began by targeting the high-end market where customers were willing to pay a premium for an electric sports car. This strategy allowed them to bypass certain scalability challenges and establish a strong foundation.

Similarly, YouTube initially focused on personal videos that users wanted to embed on their social media profiles, rather than professional content. This decision not only catered to the demands of the market but also helped navigate potential legal complexities. Uber took advantage of the unique circumstances in San Francisco, such as limited taxi availability, challenging parking situations, and a tech-savvy population, to launch their ride-hailing service successfully.