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Posts Tagged ‘Retention’

A lightly edited extract from an article by Geoffrey Keating (dated April 19th 2020).

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These are uncertain times for any business. 

Maybe you’ve seen your top of the funnel demand decreasing. Or your sales cycles are getting longer. While each company feels the impact differently, one thing is certain – businesses are being forced to adapt to change at a pace we haven’t seen before.

One strategy we’ve found particularly useful in trying times is doubling down on customer retention.

This isn’t a new insight. In the last five years alone, the cost of customer acquisition has increased by over 50%. Businesses have gradually started to switch their focus from “How do we acquire more customers?” to “How do we retain the ones we already have?” 

Getting a handle on Customer Retention:

When getting started with retention, the obvious first step might be to look at exit surveys or recently churned customers. It might sound counter-intuitive, but this is actually the wrong place to start. 

Instead, look at your best customers. 

Why did these customers stay with your product? What actions did they take in your product? Why did they expand their usage of your product? If you can figure out what and why, you can start to reverse-engineer that path for other users.

You’ll often hear these referred to as “activation metrics” or “aha moments”, the high value engagement actions and events. An analysis of these events will help you understand the behaviors that, when performed, best correlate with users continuing to use your product for an extended period of time.

The canonical example is best illustrated by Chamath Palihapitiya and the early Facebook growth team. They understood what actions separate their best customers from those they lost – namely those that added 7 friends in 10 days.

And once you understand these behaviors, you can optimize your product or communication to help even more users take these actions, see value from your product and ultimately become a long-term, happy customer.

Now that you’ve got a handle on some of the data behind your retention, it’s time to come up with creative ideas for predicting churn and improving retention.

One good example: For early stage retention, encourage new signups to take high-value product actions without delay.

Most products see a precipitous drop in engagement in the first few days. Those that don’t – Facebook, Twitter, Pinterest – do so by making sure users complete valuable product actions early on…

The other retention strategies, elaborated in the article, include looking for warning signals in terms of ongoing engagement intensity rather than mere clicking activity, communicating ROI whenever possible, avoiding single point failure by going beyond the champion in the company, optimizing the cancellation flow (seen to reduce the churn!)…

Of course the traditional wisdom of gleaning feedback from customers who left cannot be ignored. Churn is a natural byproduct of any business. Customers come and go, as does the demand for your product. Though it may be painful, make sure you have a well-considered exit ramp. Acknowledge the reasons they’re churning, address them, and make sure they leave endeared towards your company. You can use this data to either a) reclaim churned users or b) identify cohorts who are especially prone to churn, so you can get ahead of it. Best case scenario, you’ll open the lines of communication for a winback in the months ahead. But even if that’s off the table, you’ll get valuable insights you can use to help improve your product.

A quick win is tackling involuntary churn. Accidental cancellations or missed payments could account for a significant percentage of churn. The answer here is pretty simple: track the data and then create an automated email to remind users whose payments are overdue, or whose credit card is expiring…

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The article and more may be read here.

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A recent article in Inc dramatically reports:

‘In 1 Powerful Sentence, Mark Cuban Just Gave Every Company in America a Harsh Wake-up Call’

It’s a simple statement, with profound implications.

Mark Cuban – GETTY IMAGES

Goes on with:

Mark Cuban, Shark Tank investor and outspoken owner of the Dallas Mavericks basketball team, recently took to his personal blog to comment on a major issue facing the NBA — and every employer in America.

There’s been a lot of talk regarding how NBA players have really taken control of their league, with the most talented players teaming up behind the scenes to play together or asking to be traded to a different team if they’re not happy with their situation.

Quotes Cuban saying:

Some feel that the player movement we have seen … is a problem, I don’t. I think it is exactly what we should expect, and it reflects what is happening in the job market across industries in our country.

“This reality has changed what it is like to be an employer. In the past, the default was that the best employees would want a long career with their employers, because that is what you did. You kept your job as long as you could. No longer.”

And then, the 1 Powerful Sentence:

“Now the onus is on employers to keep their best employees happy.”

Don’t we guys in software industry of 1980-2010 vintage know? Talk to us and we’ll tell you horror stories to fill many tomes. With attrition soaring amok, further aggravated by shortage of talent pool, it wasn’t about keeping ‘best employees’ happy. One had to amuse whoever walked by within six feet of the front gates to lure 

Welcome to the Party, America – you’re a few decades late though. Invite us to talks – we can tell a thing or two – on how we coped up, kept the show going, our customers served without disruption!

To be fair, it’s not new to them either – I recall from many years ago a senior executive from HP,  wise to our predicament, mentioning it was no different in those early years in California. May be long forgotten with its learnings.

The article goes on to talk about the How’s of the sentence, covering all bases: coaching, empowerment, inclusivity, communication, career development…besides remuneration.

Coming back to the real subject of this post, ‘1 Powerful Sentence’:

“Now the onus is on employers to keep their best employees happy.”

You thought happiness is more for pets given to by their masters?  

Sorry, am being irreverent and flippant.

Years of working with colleagues at all levels and of all hues in good and bad times has taught us one thing that I share with you here – a perspective adding to (and not in any way invalidating) the professed sentence and its How’s:

Make it a journey with them – feasible, authentic, involved, worthwhile, interesting and enjoyable for them, for you and the organization. Happiness ensues and a lot more…

To cite a parallel, of relevance – Just as caring for community’s safety and earning their respect and the adrenal rush of running towards (and not away from) danger to save life and property are identified as the two pure and strong turn-on’s in the lives of fire-fighters who in many surveys end up high to very high in job satisfaction.

Each of those words feasible…is purposeful, non-overlapping and worthy of deliberation.

Well, I can tell you – and my colleagues out there would also vouch – it has been shown to work for its practitioners.

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I am on a constant prowl to collect stories on what companies do to enhance their customer’s experiences employing a variety of different strategies.

While on this subject, not entirely unrelated, I’m reminded of the question of ‘Employee Satisfaction’ in a software services company I was associated with. The attrition of professionals in the company was higher than the industry average. As customary the managers including the HR confidently diagnosed the problem as one of substantial wage disparity – salaries outside were easily 30% or more than what the company was paying. Unfortunately this coincided with downward business cycle leaving not much room for any significant revision. 

While the issue of compensation cannot be easily brushed aside with the younger lot in software industry, I’m dismayed to find it occupying all of the center-stage to the entire exclusion of what other things could be done for the employees.  Mumbai as a city and software services as a job leave very little time for anything else. A good number of professionals spend 2 to 3 hours daily just commuting to and fro in crowded trains/buses.  Many of them hail from other cities living in spacious accommodation before moving to closet-sized apartments in Mumbai. Given this background, reducing the hassle of living in Mumbai is a strategy worthy of serious consideration. But that doesn’t happen. A few token steps are kicked off without a cohesive strategy on this theme, more as an apology – such as providing assistance in paying utility bills, credit card bills, etc.

‘Managers’ don’t much buy into all those industry reports that cite a number of factors up there besides doling out hefty increases in compensation for employee retention/satisfaction. 

 Coming back to customer experiences, here is a simple story on the same theme of making life a wee bit easier.

This is from ‘Through the Eyes of the Customer.’  James Watson makes the point in his post so well I did not try paraphrasing it.  

“…

I love it when someone makes my life easy.

CVS Pharmacy did that this morning.  

I’ve been taking an daily allergy prescription for the past three years.  Once a year, my doctor has to re-approve the prescription so  that CVS can refill it.  And that once-a-year event happened to coincide with this month’s refill.

 Pharmacy

So, I expected that  I’d have to call my doctor, and request to have  the prescription renewed.  Or worse, schedule an appointment to get into my car, drive to the office, and endure a check-up. Either way, I’d be forced to break out of my normal routine of simply picking up the prescription at the CVS Drive-Thru and do some extra work…. 

… so I thought….on

But when I dialed the local CVS pharmacy, and punched the Prescription number into the keypad on my phone, that friendly recorded voice told me that my auto-refill had ended, and that my physician must approve the refill.  

“Damn,” I thought… Here goes”….

But the next automated message made my day:

“Press “1′ if you would like CVS to contact your physician on your behalf.”

Yes!!!  One less thing for me to do, because CVS would do it for me; they’ve designed their customer-facing process in a way to reduce work for the customer; they’ve made my life easier!!! I was delighted.

Now, it might only take me five minutes to call to my doctor’s office and make the arrangements myself.  And a five-minute task done once a year may not seem like much of a hassle. Over the course of that year, it’s really not – except when it is.  Like this morning.

The point is not the CVS saved me five minutes; the point is that CVS eliminated a Task from my To-Do-List.

Most people don’t keep track of time as clearly as they keep track of tasks that need to be completed.  Saving a customer “a few minutes” may not be clearly visible to that person, but if you save the customer from having to perform a task, they’ll notice it every time, and they’ll precieve it as a BIG convenience.  And it’s the customer’s perception that drives their behavior and loyalty.

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I recall a similar experience I had with a mobile service provider a couple of years ago. I went in to purchase a replacement SIM for my cell-phone. When I took the form with me duly filled in, at the store they pointed out I had overlooked pasting a mug-shot on the form. It meant going back home to fetch a photo. While I was ‘Oh sh##t’ing, they made me stand against a wall, got a camera out and took a shot right there in the store!   

Whether the business is of providing services or supplying products there are opportunities galore to mitigate the hassle factor for the customer in his interaction, surely  a worthwhile goal for businesses to go after.   

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Credits:  jlwatsonconsulting.typepad.com/my-blog/

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