Join Brad Batesole for an in-depth discussion in this video Retain your existing users, part of Marketing Foundations: Growth Hacking.
- A lot of effort goes into bringing in new users, so before you increase your customer base, let's make sure that you're not losing them just as fast as they're coming in. Retention is the act of keeping your current customers loyal. If you have a subscription model, that's keeping them subscribed month over month, and if you sell individual products, that's turning them into a repeat buyer. Now before we get into some strategies for retention, let's look at why this is so important. A study conducted by Bain & Company revealed that a 5% increase in customer retention can mean a 30% increase in company profitability.
That's an impressive return. It's not just the repeat purchasing that improves the bottom line. It's also because of the reach a loyal customer has. They become an inexpensive marketing vessel, sharing your message to their friends, participating in social media contests, writing about your product, and even contributing to online reviews. I've seen a lot of companies struggle with retention firsthand. There's oftentimes a lack of prioritization, especially if the virality of the business is impressive. It can be easy to get tunnel vision on viral growth, and ignore the warning signs of decreasing retention rates.
But at a high level retention is more important than virality. With very high retention you could do without virality, and still see your user base grow over time. But the contrary is not true. No retention and higher virality will almost always be an indicator of a business doomed to fail. Take Groupon, the once popular daily deal site, for example. They had unbelievable viral growth. They wrote one growth hack after another, employing social sharing, customer referral bonuses and gifting.
They focused so heavily on the virality that they ignored their retention problem. Rice University conducted a study and learned that Groupon only retains a small percentage of its customers. Both the brands sharing the deals and the customers buying the deals were leaving faster than they were coming in. That left them with a stock crash of 43% in 2014. With that said, you'll need to dig into why your users are leaving, and run tests to determine what improves your retention rate. If you don't have any idea what your retention rate looks like, then you've got a clear starting place to implement tools to collect that information.
One of the easiest places to look is in your product offerings. If you have a lot of users waiting on a particular feature, leverage the power of a "coming soon" feature announcement. Let your users know what's on the horizon. Another great area is in user education. Help them see the full value of your product. Build comprehensive walkthroughs if necessary, and have easy-to-access support. If you have a subscription software as a service product, then take a look at your cancellation flow. Can you implement a survey question? Make a list of reasons you think people might be cancelling, and have these users provide you insight.
From there, you can start to alleviate those pain points. You can even display a dialog based on their response with a solution to their problem. Finally, ask. Conduct surveys. Ask if people are going to stick around for another month or return to buy another product. Find out why they're staying or why they're leaving. Understanding and improving your retention is an absolute must before you dive into growth hacking. Strive to have the highest possible retention rate for your particular industry. The effort will pay off in the long run.
The course concludes with growth-hacking case studies, highlighting the growth-hacking techniques that helped propel such companies as Airbnb, Uber, and Tinder to explosive growth.
- What is growth hacking?
- Understanding the funnel
- Setting up tracking and analytics
- Leveraging customers and existing users
- Testing ideas
- Generating an audience
- Creating an incentive strategy
- Real-world examples of successful growth hacking