Imagine being able to acquire users for mere cents. Sounds like a dream come true to any growth marketer, doesn’t it? Now, imagine the same scenario with the worst retention rate possible. It quickly sounds like a nightmare.
Whether you’re a construction company, software startup, or Fortune 500 company, retention is a key metric across customers, employees and partners alike.
Retention basically means a company’s ability to retain customers over a period of time.
Growth marketing isn’t the silver bullet to solving retention, but there are definitely some tactics which can be implemented to help. Let’s dive in.
If anything should fit like a glove within a company, it’s the growth and product teams. While at Postmates, I saw first-hand how a well-oiled machine could work together to tackle customer conversion and retention. Weekly meetings between teams would take place, to address conversion rate trends and customer stickiness between growth mediums.
With the knowledge gained, I believe the three key focuses for growth and product should be:
A consistent issue and theme which I’ve seen cause countless headaches across startups, is the lack of measurement capability. Measuring conversion volume accurately, is paramount for all companies. Otherwise, efforts become inefficient. It would also be naive to think that measurement is a set-it-and-forget type of task. Measurement should be approached as a constant work-in-progress, as channels and the privacy landscape are constantly evolving.
Working in lockstep on specific growth campaigns with the product team, helps make initiatives personalized, accurately measured, and increases the chances of success. Imagine having a specific funnel for visitors which are net-new versus retargeted. Or how about different landing pages which are specific to influencers? These are just some of the examples of the tests which should be taking place between growth and product teams.
Whenever a new product, feature, or promotion is launched by the product team, the growth team should be the first ones with their hands on it. All the campaigns from the lifecycle and the paid acquisition teams will be the first touchpoint for customers, so ensuring there’s understanding between these two teams, is crucial.
If the growth and product teams work in lockstep and prioritize the key focuses mentioned above, retention will make huge leaps in a positive direction.
When I was working on fleet (or driver) acquisition at Postmates, we went from budgeting using simple methodology, to measuring channel effectiveness on an LTV and retention basis. How long did our drivers stay on the platform, if they were acquired from Google as opposed to Facebook? These were questions we sought to answer by using collected data and slicing it in a multitude of ways.
Here’s an example of what a basic analysis looked like:
By looking at channels beyond their initial customer acquisition cost (CAC), we were able to understand which channels brought in the highest value users. E.g., In the analysis listed above, Indeed looks to the one of the weakest performing channels at a CAC level. However, when looking at the lifetime rides that an Indeed-acquired driver makes, their LTV/CAC ratio is 22.50, which actually puts Indeed, as the #2 best performing channel. If we had only measured effectiveness based on CAC, Craigslist would be the #2 performing channel, which would be misleading as to actual performance.
It’s imperative to constantly run analyses on the sources which are driving growth, at a detailed and bottom-of-funnel level. This is a surefire way to increase retention and focus on what’s driving efficient growth.
What’s better than leveraging free tactics to improve retention? Nada. Say hello to owned channels. These are channels like email and push notifications, where communication happens to users who have already been acquired.
The ultimate goal is to nurture and keep those users engaged, so that they stay loyal to your product or service. While not an exhaustive list, here are some of the top themes I recommend leveraging to increase retention:
Now that we have key content themes defined, the second facet is determining how to bucket users into these different cohorts. Every startup will have a different approach to bucketing users, but there are a few key questions to help you with that process:
To continue with my Postmates fleet example, we worked on answering these questions, including setting up communications and promos to mitigate drivers from dropping off, new app enhancement notifications, etc. We also focused on continuing to evolve our style of communication, using responses from drivers to gain further clarity on why they were churning, and the types of offers which would bring them back.
At the most basic level, if the product or service your startup offers makes people feel good, happy, with a sense of gaining value, they’ll stick around. Moreso, they’ll exude that happiness by recommending your startup to friends and family.
Make sure you’re constantly getting feedback from users who love your product, as well as those who didn’t stick around, because each will provide tremendous insight. Having a constant pulse on feedback will improve retention and help enhance all growth marketing efforts more than anything. There are thousands of tools to help combat churn. I would highly recommend doing research on the ones which apply to your startup.
Finally, think of it this way: if you believe that happiness is a reason people stick around in relationships (including between users and products!), you’re on the right track to solving retention.
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