Alex Schultz on Setting Retention Benchmarks for Startups

Facebook’s VP of Growth, Alex Schultz, emphasizes that understanding the right retention targets is critical—and that these numbers vary by industry. “Businesses in different verticals require different terminal retention rates. If you’re in e-commerce and you’re retaining on a monthly active basis 20-30% of your users, you’re probably going to do pretty well. If you’re in social media and the first batch of people signing up to your product aren’t 80% retained, you’re not going to have a massive social media site.”

Schultz explains that founders must use “dimensional reasoning” to determine suitable retention goals for their business. For context, during his lecture, he used Facebook’s own data: at the time, 2 billion people were online outside China, and Facebook had 1.3 billion active users—yielding a retention rate of about 65%.

He encourages applying this kind of reasoning when estimating terminal retention rates for other giants like Amazon and WhatsApp. These numbers might not be exact, Schultz notes, but they serve as useful benchmarks for startups to back into the retention rates they should be aiming for.