The Subtle Art of User Retention

Today’s featured startup is taking on the churn problem head-on.

Project Overview

Every developer of cloud-based services knows the pain: a new user signs up — but doesn’t stick around. The initial subscription is just a "claw caught", but instead of getting fully engaged, many users quietly churn.

To prevent churn, users must start actively using the product — discovering and relying on its key features. But before they can use these features, they need to know about them.

Sure, they might’ve read about them on your landing page — once. But most have already forgotten. And with new features added regularly, even loyal users often miss what’s new.

That makes user education — ongoing and contextual — a distinct and essential challenge for anyone building cloud services.

Resonance is a platform that tackles this exact problem. And it’s more complex than it seems.

For starters, you can’t expect users to read product docs. Almost nobody does.
You also can’t flood them with random pop-ups — that’s a fast track to irritation and churn.

So what can you do? Smart onboarding cues. Resonance shows helpful prompts based on what the user is actually doing in the product. It throttles frequency to avoid overload. And it adapts the format — from subtle tooltips to contextual banners — based on what works best.

This gives developers a tough optimization puzzle:

• What kind of prompts should appear?

• When should they appear?

• And in what format?

Resonance’s AI engine solves this automatically, testing and adjusting timing, frequency, and visuals to maximize engagement. According to the team, their AI finds optimal configurations 7x faster than manual A/B testing.

The platform likely tailors prompts not just globally, but on a per-user basis — something most developers would never attempt manually.

Integration is simple:
Developers embed a few hooks once. After that, marketing and product teams can launch, edit, and optimize campaigns without writing code.

Launching a new feature announcement takes just a couple of minutes — unless you’re designing new formats, in which case it might take up to 20 minutes. Still a small price for smarter user engagement.

Resonance was founded last year and recently joined Y Combinator, raising an initial $500,000. Its first version launched just days ago.

What’s the Gist?

Helping users discover product features is just a means to an end.
The real goal? Boosting Net Revenue Retention (NRR) — also known as Net Dollar Retention (NDR).

There are two main ways to measure retention in a SaaS business:

• Logo Retention: What percentage of users are still around?

• Net Dollar Retention (NDR): How much more are existing users paying over time?

Let’s break it down:

In January, 100 users sign up at $10/month.
Six months later, only 70 remain — Logo Retention = 70%.
Of those 70, 49 are still on the basic plan, and 21 have upgraded to a $30/month plan.

So your revenue is now:
(49 × $10) + (21 × $30) = $490 + $630 = $1,120
That’s NDR = 112% — even though you lost 30% of your users, your revenue grew.

And that’s what matters. NDR is the true health metric of any subscription-based business.
Because no matter how good your product is, some users will churn. The key is earning more from the ones who stay.

Top-performing SaaS companies target NDRs of 110–120%, with the best-in-class reaching 150%+.
The image below shows examples from leading cloud IPOs between 2017 and 2020.

So how do you grow NDR?

Users can pay more for:

• Increased usage

• Additional licenses

• Access to premium features
  — but only if they know about them.

That’s why ongoing feature discovery isn’t a “nice-to-have” — it’s a core growth mechanism. And that’s what Resonance enables.

They’re not alone in the space — platforms like Appcues also tackle this problem.
(Appcues, by the way, has raised $52.8M — including a fresh round right after it was featured in a previous case study.)

Key Takeaways

The subscription model is the foundation for most cloud services.

At first, it’s all about acquiring new users. But over time, acquisition gets harder and more expensive — and every service has a limited addressable market.

Worse: if your user base churns faster than it grows, your product becomes a leaky bucket — pouring in new users won’t help.

That’s why the first priority for any SaaS team is retention.
And since you can’t retain 100% of users, your goal shifts to retaining revenue — i.e., maximizing Net Dollar Retention.

There are two critical steps:

1. Build pricing models that scale with usage or feature adoption.

If all your users are on the same plan, you’re capping your growth. Offer advanced tiers or paid add-ons so power users can pay more.

2. Guide users into deeper engagement.

Otherwise, even the best pricing model stays theoretical.

That’s where platforms like Resonance, Appcues, or custom-built solutions come in.
They help turn passive users into power users — and boost your NDR as a result.

With AI-powered platforms like Resonance, this process becomes faster, smarter, and more scalable — exactly what cloud developers need right now.

Company Info

Resonance

• Website: useresonance.com

• Last funding round: $500K, 01.12.2023

• Total Investment: $500K, across 1 round