7 Ways AI-Native Companies Can Improve Retention | Andreessen Horowitz

🌈 Abstract

The article discusses strategies for improving user retention for AI-native consumer products, drawing insights from successful retention tactics used by non-AI consumer products.

🙋 Q&A

[01] Minimizing Time to Core Value

1. How can AI-native products minimize the time it takes for users to experience the core value of the product?

• AI-native products can focus on delivering their core product value as quickly as possible, including:
  • Ensuring high quality of the underlying foundation models to provide a speedier and more relevant user experience
  • Adopting a minimalist UI design that clearly communicates the product's core functionality, similar to Google's search-focused homepage

[02] Forcing the "Aha Moment"

1. How can AI-native products ensure users experience the "aha moment" early in the onboarding process?

• Products can "gate" the full usage of the product behind a robust onboarding flow that requires users to complete certain actions, such as:
  • Inviting a minimum number of friends (for social apps)
  • Learning the product's commands and creating sample content (for AI-powered creation tools)
• This ensures new users understand the core value proposition before being able to fully use the product.

2. What are some examples of AI-native products adopting this "gated aha moment" strategy?

• Lapse, a disposable camera app, requires users to invite at least 5 friends before being able to use the product
• Viggle, an AI-powered character video creation tool, requires users to join a Discord server and learn the product's commands before creating their first video

[03] Reciprocity and Content Unlocking

1. How can AI-native products leverage the principle of reciprocity to improve retention?

• Products can "gate" access to certain content or features behind user contributions, creating a "give to get" dynamic that incentivizes users to create content, which in turn increases the overall content density of the product.
• For example, the BeReal app limits access to friends' content until the user creates their own daily BeReal post.

2. Have many AI-native products adopted this reciprocity-based content unlocking strategy so far?

• The article notes that not many successful AI-native products have yet adopted this mechanism, presenting an opportunity for AI-native products that can benefit from increased user creation and whose core value aligns well with the principle of reciprocity.

[04] Thoughtful Notifications

1. What are some best practices for AI-native products when designing notifications to improve retention?

• Consider the message being delivered, the perceived sender, and the frequency of notifications:
  • Notifications from the product itself (e.g., promotional messages) may be seen as annoying, while notifications from a user's friends with new content can feel more positive.
  • Timely, valuable notifications (e.g., Perplexity notifying users about breaking news in their interest categories) can effectively bring users back to the app.
• However, too many notifications can lead users to turn them off entirely, so moderation is key.

[05] Streaks and Activity Summaries

1. How can AI-native products leverage streaks and activity summaries to improve retention?

• Streaks, which track consecutive usage and allow users to share their progress, have been effective retention drivers for many apps.
  • AI-native products whose core value proposition relies on habituation, such as language learning or journaling apps, can incorporate streak functionality to encourage repeated usage.
• Activity summaries, such as personalized recaps of a user's interactions with the product, can also boost retention by providing a unique, rewarding experience for users.
  • AI can enable more creative and intelligent summarization of user activity, such as Omnivore's ability to generate daily audio podcasts from a user's saved articles.

[06] Rewarding Influential Users

1. How can AI-native products use status and community rewards to improve retention?

• Giving dedicated, influential users within the product community special statuses, such as moderator roles or leaderboard rankings, can encourage them to continue engaging with the product and also provide new users with goals to work towards.
• Examples include Civitai's leaderboards for AI model creators, where users compete for the most likes in various categories.

[07] Prioritizing Retention Strategies

1. How should AI-native products prioritize and approach retention strategies?

• The best retention strategies will depend on the product's business model, target audience, and industry.
• Not all users may be worth retaining - pushing to retain "tourists" could ultimately water down the community and product experience for higher-value users.
• As the AI-native consumer product space is still in its early days, companies can draw lessons from successful retention strategies used by non-AI consumer products, while also exploring new, innovative approaches tailored to their unique offerings.