Amazon has a serious Alexa user retention issue

Amazon has done remarkably well in building, marketing and selling Alexa voice-powered hardware devices during year-end holiday seasons. Like clockwork, the e-commerce giant routinely touts that its own devices, including the Echo Dot and its Fire TV Stick with Alexa Voice Remote, are top sellers. We have no reason to doubt Amazon’s sales claims, but that’s apparently only half of the story.

According to a recent report from Bloomberg, Amazon has a dirty little secret that it has been contending with for years.

Internal documents seen by Bloomberg suggest Amazon has a serious user retention problem. Data indicates that there have been some years where 15 percent to 25 percent of new Alexa users were no longer active into their second week of usage.

There are likely several layers to Amazon’s Alexa engagement issue.

The data mentioned by Bloomberg involves holiday sales, which likely means a significant portion of new devices are being received as gifts. Maybe these users never really wanted an Echo to begin with and only hooked it as a kind gesture to the gift-giver.

Bloomberg also talks about Alexa’s usefulness as a barrier alongside privacy concerns. Some apparently only use Alexa for a handful of tasks, like setting a kitchen timer while they cook, to play music or toggle the lights on and off, oblivious to the many other functions Alexa can perform. When Amazon started having Alexa offer up suggestions more frequently, some users got annoyed.

Amazon spokesperson Kinley Pearsall dismissed this pessimistic view of Alexa. “The assertion that Alexa growth is slowing is not accurate,” she said. “The fact is that Alexa continues to grow – we see increases in customer usage, and Alexa is used in more households around the world than ever before.”