Switched from calculating retention based on active users to actual revenue retention per cohort.
Turns out we were retaining users but they were downgrading like crazy. The numbers looked healthy until we dug deeper.
Now tracking dollar retention instead of just user retention.
Focus on revenue not just users.
Revenue retention shows which features actually matter to paying customers.
I track dollar retention by cohort to see if my updates drive upgrades or downgrades.
Most apps think user retention tells the whole story, but what paying users do with their wallets is what really counts.
Dollar retention equals expansion versus contraction rates. Track these separately. Expansion shows which users spend more over time. Contraction shows who’s cutting back. Many apps focus on churn and miss the revenue loss from downgrades. You can have zero churn and still lose money if everyone is downgrading. Set alerts when expansion dips below contraction - that’s your early warning signal.
We track both now. Revenue retention catches downgrades that user metrics miss completely.
Been there. Same wall with a subscription app two years ago.
We celebrated 85% user retention while revenue stayed flat. Turns out people stuck around but kept downgrading to free or cheaper plans.
Switched to tracking net revenue retention monthly. Brutal wake-up call - we were bleeding 15% revenue from existing users every month.
Completely changed how we handled feature limits and pricing. Had to gut the free version to stop the downgrades.
Revenue retention shows what’s really happening. User counts just make you feel good while your business dies.
