Objective:

Evaluate user retention over time to assess product stickiness and long-term growth viability.

Decision:

Do not scale acquisition until first-month retention is materially improved. Growth efforts should prioritize early value reinforcement rather than downstream engagement optimizations.

Why this matters:

Cohort analysis shows sharp churn in the first month across all cohorts, with retention stabilizing after month two. Later cohorts do not outperform earlier cohorts, indicating limited improvement in early product experience over time. As a result, acquisition spend increases user volume without meaningfully increasing retained users.

Evidence:

Customers were grouped by first purchase month and tracked across subsequent months. Retention drops significantly in month one, then plateaus across cohorts, suggesting repeat usage rather than habit-forming growth. Downstream engagement remains stable, but does not compensate for early churn.

Trade-off:

Focusing on early retention delays short-term user growth, but avoids inefficient acquisition spend that does not translate into long-term value.

Supporting Code (GitHub): https://github.com/adamtran042-portfolio/case-2-early-retention-constraint

Cohort Analysis through Customer retention 2010-2011