While many SaaS companies may be experiencing relative growth during COVID-19, all businesses are afraid of customer churn. Fight churn by building a retention strategy.
Even for hypergrowth SaaS companies, like Contentful, which just raised USD 80 million in the midst of a pandemic, figuring out how to boost retention is vital. “Brands need to be digital-first to retain customers, otherwise, they will cease to exist,” said Stephanie Perozo, Contentful’s senior product marketing manager.
Stephanie joined FullStory’s VP of Sales EMEA and the heads of the U.K. and Germany’s largest experimentation consultancies in a GO Group Digital Roundtable discussion about why every business should have a retention strategy, and why it’s just so hard to build one. The key takeaway: Don’t aim to fight churn, which is shortsighted. Instead, build a proactive, data-driven, customer-centric retention strategy for long-term business success.
Here are the highlights for GO’s Roundtable discussion.
Read this book.
Hooked: How to Build Habit-Forming Products by Nir Eyal. If you could read one book to inform your retention strategy it’s this one.
Focusing on short term results instead of long term growth is a management problem.
Just because calculating customer lifetime value and retention is hard, doesn’t mean you shouldn’t be measuring it,” said André Morys, CEO of konversionsKRAFT.
Have “proxy metrics” or “micro-moments.”
Yes, your company should have product adoption milestones, but it should also have “proxy metrics” or “micro-moments” that can act as leading indicators on retention. These proxy indicators depend on your business.
When stuck: “Flip the question – why are you losing customers?
Build your experimentation (and retention) program around that,” said Stephen Pavlovich, CEO of Conversion.
Don’t wait to build a retention strategy. But don’t ready, fire, aim.
“Move swiftly and with purpose – companies need to understand what is and is not working quicker than ever, or risk competition and consumers passing them by” said Andrew Fairbank at FullStory.
Fighting churn is reactive and shortsighted. Building retention is proactive.
While retention is the opposite of churn, you’ll build a more valuable business by creating a strategy to boost retention.
SaaS companies could look at retailers for inspiration.
Contact lenses, food, and grocery delivery businesses are using well-known psychological principles to create habits and boost retention.
Retention is a lagging indicator. Manage through leading indicators.
It can takes months, even years, to measure it. Because too many companies are focused on short-term growth, retention metrics and strategies are scarce. Have “proxy metrics” or “micro-moments” that can act as leading indicators on how retention will perform. These proxy indicators depend on your business.
Too many companies, especially retailers, spend to acquire the same existing customer again and again.
But in almost every industry, “the money” is earned in the second and third purchase.
If you can grow retention, then you don’t have to spend so much on acquiring the same customer.
You can directly reduce your marketing spend and the cost of customer acquisition. This is easier for SaaS companies because they can think in longer-term customer relationships.
You can’t fight copycats or prevent competition.
You can build moats like a robust online community and partner ecosystems. Beware of playing defense, however. Focus on understanding your customer and creating value for them, first and foremost.
Don’t guess but beware of a tool solution to create a retention strategy.
Talk to customers that left you. Figure out what is NOT working and fix it. Be and act customer-centric. Bring in tools to help you understand reported customer behavior.
In crisis mode, avoid knee-jerk reactions like price-cutting.
Don’t hand out special incentives to prop up growth. “Focus on understanding if your customers are getting value from your solution and optimize from there,” said Fairbank.
Want more insights and a full copy of the July 15, 2020 GO Group Roundtable: Locking in long-term growth through a better retention strategy? Please reach out.
Special thanks to our guests for this GO Roundtable discussion
Fresh off a Series E funding round of USD 80 million by Sapphire Ventures, Stephanie is a senior product marketing manager at Contentful specializing in SaaS marketing for EMEA. Stephanie.firstname.lastname@example.org
Stephen founded and leads Conversion.com, the largest experimentation consultancy in the United Kingdom and Ireland. He and his team run test and learn programs for Facebook, Dominos, and Canon. He is a GO Strategic Partner. Stephen@gogroupdigital.com
Andrew is the VP of Sales, EMEA for FullStory, a customer experience platform that captures customer experience data in one powerful and easy-to-use platform. Andrew previously worked with experimentation (Optimizely) and mobile marketing (Leanplum) companies prior to joining FullStory to build and scale their European team. Andrew@fullstory.com
André leads 70 digital experimentation consultants as CEO of konversionsKRAFT, the largest digital experimentation consultancy in Germany. When he’s not speaking at international conferences or helping build the GO Group as a managing partner, André helps large German companies leverage consumer psychology, behavioral economics and game theory to unlock growth. Andre@gogroupdigital.com
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