customer retention: the key to growth
TRANSCRIPT
CUSTOMER RETENTION:THE KEY TO GROWTH
Retention is by definition an ability of business to keep their
customers
1 2 3 4 5 -
100 200 300 400 500 600
Ability to retain customers is the key driverfor long-term value creation
New customers: 100/mthAverage spend: 10$/mthFirm A churn: 1%/mthFirm B churn: 5%/mth
k USD
4% churn difference in 5 years leads to 55% lower revenues
EXAMPLE
Year
Firm A
Firm B
Growth without solid retentionis attempt to fill a leaky bucket
Often overlooked 3-step conversion model provides good guidance for retention increase• Visitor – Visitor • How well do we keep our visitors?
• Visitor – Customer• Do we convert visitors to customers?
• Customer – Customer• Do we motivate customers to shop again?
Bad retention problems impair company growth, cash-flow stability and brand image
Low growthChurn forces company to
acquire more users to keep base, leading to
increased cost and lower profitability due to low
LTV/CAC ratio
Low stabilityChurn makes future
income less predicable, worsening outlook and valuation of company
Bad imageCustomers leaving the
company spread negative word around
making future acquisitions harder in
the long-run
Trying to fill the leaky bucket leads nowhere if you do not remove its primary cause
Imagine heaven where you do not lose your customers anymore. How can get there?
Measure and analyze
Online firms have to use analytics to
understand users
Search for trends
Look for trends and common traits
connecting groups
Test and iterate ideas
Make experiments to see what works best
for your company
You cannot manage without measuring – using a quality analytics platform is a necessaryMeasure and analyze
Google Analytics is a good start, but does not suffice in the long-runLook for platforms, that:
1. Are customer-centric 2. Work with real-time data3. Enable deep dive to data4. Allow advanced filters & views5. Provide engagement features
Initially focus repeat purchases in conversion funnel and cohort behavior
Funnels• What are conversion paths?• Where are the bottlenecks?• What’s a time to conversions?Retention cohorts• When do customers return?• How long customers stay?• How it changes over time?
Identify KPIs and watch trends
1st purchase
2nd purchase
3rd purchase
4th purchase
Purc
hase
funn
elCo
hort
an
alys
is
Data-based hypothesis need to be systematically A/B tested in campaigns
• Conversion funnel can be influenced by well timed actions• AB testing helps to find positive
changes faster and eliminate impact of negative changes • Hundreds of small tweaks has to
be tested, companies need to run campaigns very effectively or they stay in a dark age
Test and iterate ideas
Good analytics platforms will help you improve both product and communication with users
There are two viable roads on the way to better retention rates, good platforms will enable both
Improve product
Users might not get enough value from your
offering
Upgrade communicatio
nUsers may not
understand how they can get value or how big
the value is
Decrease prices
Cheaper product may make users more
tolerant to its flaws
Road to hell in the long-run
Combine robust analytics and campaign feature to test and immediately implement your findings
• Set up company structure and processes so you can easily change design and functionality without lengthy discussions• Continuously evaluate customer
journey and behavior to identify potential pain points• Use A/B tests to evaluate user
preferences• Proactively collect user feedback
Improve product
Campaign management tools help with quality of communication and customer experience
• Use insights to streamline andpersonalize communication• Well timed actions with right
message delivers wow and leave long lasting emotions• Design campaigns that would
accompany users throughouttheir journey and life-cycle
Upgrade communication
2. Track and analyze
user behavior to see trends and pain
points
1. Set retention as your
first priority if you have long-term
ambitions
3.Test hypothesis and
use data to align product and
communication
Way to 100% retention is long. Start today.
Want to use analytics of fast-growing companies? Visit exponea.com to learn more