Two Types of Positive Feedback that Determine MAU Trends

Simply looking at the current trend of MAU cannot predict its future trajectory. For example, in the Growth Accounting Framework — during a certain period, some people start using your product (user acquisition), some leave your product (churn), and some leave and then return (reactivation), resulting in a net MAU value. As time goes on, user acquisition and reactivation become increasingly difficult; the more users there are, the higher the churn rate. The overall MAU curve tends to flatten or decline.

So what are the indicators that can predict future MAU? Andrew believes there are two:

1. Positive feedback from user acquisition
2. Positive feedback from retention and reactivation

Positive Feedback from User Acquisition

UGC + SEO Positive Feedback

Representative Companies: Yelp, Houzz, Wikipedia

1. New users see good content
2. Some new users join in to create new content
3. Google indexes this unique new content
4. Users search for more content

Paid Marketing Positive Feedback

Representative Companies: Blue Apron, Casper, Uber

1. New users click on ads
2. Some new users try the product
3. Some become paying users
4. More budget is allocated for advertising

Viral Marketing Positive Feedback

Representative Companies: Dropbox, LinkedIn, Instagram

1. New users register
2. New users invite/share content with friends
3. Some friends click on the link
4. Friends respond to the invitation/shared content

The conversion rates and numbers of these four steps can be calculated. For example, 30% of new users may import contacts and send invitation links to 10 people, of which 40% actually send the link, and 50% of those who receive the link will register. Thus, the growth factor is 0.6, meaning that from 1,000 registrations, there will be 600+ new registrations; over time, this could reach 2,500.

How to improve? Break down the steps and tackle them one by one.

Positive Feedback from Retention and Reactivation

Social Positive Feedback

Representative Companies: Instagram, LinkedIn, Gmail

1. Users create content
2. Content is seen by other users
3. Content receives social feedback
4. Notifications are sent to the content creator

Personalized Content Positive Feedback

Representative Companies: Zillow, Credit Karma, Netflix

1. Users subscribe or add
2. New content appears
3. Users are notified or receive a push feed
4. Users see and like the content

Non-Scalable Channels

PR, promotions, holiday features, conferences, content marketing, partnerships, and app store feature updates. These are all drivers that can attract people into these positive feedback loops, but they are not the positive feedback itself. These drivers are either difficult to attribute or hard to sustain over time.