Twitter will struggle to grow as a business if it fails to convert the large volume of people that try it out into loyal long-term customers.
More than 60% of people that sign up to Twitter stop using it by the next month, according to research carried out by Nielson Online in the US.
In his blog David Martin, vice-president of primary research at Nielsen Online, said social networking sites that have made it big recorded better retention rates in their early days. "Even when Facebook and MySpace were emerging networks like Twitter is now, their retention rates were twice as high. When they went through their explosive growth phases, that retention only went up, and both sit at nearly 70% today."
The microblogging application, which enables users to stay in touch and share information in real time with a maximum of 140 characters per message or "tweet", is seeing an explosion in users.
Twitter has grown by more than 3,000% in the past year, according to figures from internet monitoring site Hitwise. Its share of UK traffic increased by about 33 times between February 2008 and February 2009. The site is growing 25 times faster than Facebook, which grew by 123% in the same period.
Martin said, "Let there be no doubt: Twitter has grown exponentially in the past few months with no small thanks to celebrity exposure. People are signing up in droves, and Twitter's unique audience is up over 100 percent in March. But despite the hockey-stick growth chart, Twitter faces an uphill battle in making sure these flocks of new users are enticed to return to the nest."
He said Twitter's audience retention rate, or the percentage of a given month's users who come back the following month, is currently about 40%. "This retention rate will limit a site's growth to about a 10 percent reach figure."
He said a large retention rate does not guarantee success but is a prerequisite because it will eventually run out of potential customers.