Plenty of users are willing to try an app or product once or twice. But keeping them coming back? That takes something special.
The word for getting customers to return to your site or product over and over is retention. Among all product metrics, retention is generally considered the one that most reflects existing customers’ getting ongoing value from your product.
It’s also (mostly) the key to sustaining a successful business, and bringing in revenue over time.
The strategies for retention are different from the strategies you’ll use to acquire new customers. Acquisition – getting new customers to your site to try your product – is all about the promise you make them. It’s about what you say your product will do. Retention is about delivering on that promise, again and again, to create repeat customers and long-term customer loyalty.
Why customer retention matters
The argument for retention is easy: without it, you simply can’t keep a business going. Most of us know that it’s far more expensive to acquire a new customer than to retain a current one — anywhere from 5 to 25 times more expensive. Retention is what keeps money coming in. It’s also what tells you if your solution can keep customers happy. It’s for that reason that customer retention is the best measure of product-market fit. It’s the metric that best captures whether a market finds your product worthy of ongoing customer loyalty.
As the chart below shows, losing 5% of your users a month means a yearly churn rate of 43%!
Comparing churn rates. Starting with 100 users, a churn rate of 6% per month leaves you with 51 users at the end of the year. Lowering that churn rate by 1% gives you 6 more users. That’s real money!
This 43% doesn’t only mean a loss of income via diminished subscription costs, sales, or renewals. It also holds back growth, since if you’re churning at 5% a year, you need to grow by 43% per year to just maintain a constant number of users.
It simply makes more sense to invest in strategies that retain current customers than to continue to add new customers who will eventually be lost. We’ve assembled some of the most creative strategies that product managers and marketers are using to keep their customers coming back. Feel free to borrow their tips for your own retention efforts!
1. Empower brand ambassadors
Feminine hygiene company Thinx used their largely word-of-mouth business model as inspiration for their customer retention strategy. How? By creating an active community of brand ambassadors.
Thinx Brand Ambassadors make up a robust community of women bloggers, health educators, and online influencers who talk about their experience with Thinx products through their social media (think blogs, Instagram posts, and YouTube videos). Through VIP discount codes and affiliate commissions, Thinx rewards its ambassadors for creating long-term customers.
To support its ambassadors, Thinx gathers insights around how many new customer visits to the Thinx platform each ambassador generates and which discount codes are being used. By analyzing buying patterns, the company is able to suggest product styles or colors that might help create a personalization strategy for each ambassador’s next sales campaign.
The genius of Thinx’s ambassador program is that it empowers real-life Thinx users to educate their own communities on the value of Thinx’s products. By expanding their ambassadors’ brands, Thinx taps into the loyalty of their dedicated followers, increasing customer lifetime value among existing customers and expanding its marketing campaign beyond what the company could do on its own.
2. Shorten your trial period
Can a free trial period be too long? That’s the question Instapage asked.
A landing page platform that allows marketers to build, integrate, and A/B split-test landing pages at scale, Instapage has a goal of making advertising more relevant and effective for everyone.
When reviewing its offerings, Instapage’s marketing and product teams start wondering about the length of their trial period. After all, length might make a difference to customer acquisition: if a trial period is too short, customers may not get enough time to play with the product. But too long and you let prospects slip past the window when they’re most excited and likely to buy.
So Instapage conducted an experiment. Half their customers got a 30-day free trial. The other half only got 14 days. Was there a difference? As it turned out, yes! But not in the way they anticipated.
What the team learned was that in both cases, people either converted at the very beginning of the trial or towards the end. The length of the trial made no difference — if customers didn’t buy right away, they nearly always waited until the end of the trial, when the loss of the free trial motivated them to purchase.
Instapage decided to permanently switch their free trial to 14 days. This brought in revenue at a faster pace, without alienating customers.
So consider playing with the length of your free trial. It might reduce time and effort in your customer acquisition strategy.
3. Be scientific
If there’s one thing we recommend about increasing retention, it’s this: be scientific. Online mattress company Casper used the scientific method to significantly improve the customer experience.
Here’s the breakdown:
Make an observation. Casper observed that 80% of their customers opted for free same-day mattress delivery, versus the standard UPS option. This option was shown to customers near the end of checkout.
Form a hypothesis. If same-day delivery was so popular, would presenting that option earlier in the customer journey improve conversion and retention? They team hypothesized that it would.
Test. The team placed an interactive pop-up early in the checkout flow, letting customers enter their zip code so Casper could tell them if the free same-day service was available to them.
Measure. It worked! Putting this pop-up earlier in the checkout flow increased engagement with shipping info by over 100%. Overall, conversion increased by 20%.
Repeat. Casper is now looking for other areas of high customer engagement, and actively making more hypotheses.
Improving retention isn’t just about throwing ideas at the wall and seeing what sticks. It’s about taking an objective, standardized approach, and using data to locate the moments of greatest opportunity.
Be scientific! Download The Heap Book of Questions.
4. Text people the app
FightCamp is an interactive at-home boxing gym that offers high-quality video boxing instruction, which it pairs with a patented “punch-tracker” that monitors the user’s boxing technique. The company’s mobile app offers a large catalog of boxing workouts through a monthly subscription plan.
FightCamp’s free trial let prospects try out workouts before committing to the monthly subscription. As might be expected, customers who took advantage of the free trial converted at a much higher rate than those who didn’t.
So how does FightCamp get more people to experience the free trial? The answer: Make it easier to download the app.
Rather than put the free trial out there and hope people took advantage, FightCamp tracked engagement with their mobile and social media ads. Instead of just responding with a email marketing, the company got prospects’ phone numbers and texted them the free-trial app to download. It then ran a follow up to check on adoption.
The result? A significant increase in the number of people who tried the app, and a measurable improvement in conversion, retention, and lifetime value.
Download The Heap Guide to CRO.
5. Serve your customer from beginning to end
Few things in life are more exciting than buying your first home. Real estate company, Redfin capitalizes on that initial excitement by creating a customer experience they describe as “24 hours of magic.”
What does it look like?
Tour homes in-person on demand. Use the Redfin website or app to tour homes at your leisure. Save searches for your favorite neighborhoods and get alerted every time a new home is added.
Make an appointment. Every home listing has a “Go Tour This Home” box next to the home photo. Schedule an appointment with an agent for the same day or whenever is most convenient for you.
Instant communication with a Redfin agent via email. Let your agent know, in detail, what you’re looking for in a dream home.
What makes this process work for Redfin is that they’ve made it super simple to view a house online, then connect with one of their own agents to move towards the buying process. Redfin’s online customer relationship leaves no room for their customers to jump from their app to a different real estate brokerage’s.
The more you can serve your customers’ needs, the more your site works as an informal loyalty program, and the more likely customers will stick around.
6. Wow them in onboarding
Even if your product is crammed with amazing features, if customers don’t experience an “aha!” moment early on, they’re likely to jump ship. If you’re in charge of retention, it’s your job to show users value as quickly as possible.
Enterprise SEO platform and content marketing suite Conductor wanted to figure out how to do this. First the company’s accounts team used a product analytics tool to figure out which activities in the product most correlated with users’ getting value. The digital team then used this information to revamp their onboarding process to drive users to these more valuable features.
The effects rippled out: customers felt more confident about going with Conductor, because they had already experienced the company’s most valuable features. Renewals became more automatic. Salespeople were able to pursue more longer-term contracts.
What’s the takeaway? Teams often think about retention as something to worry about after users are in the product. But in fact customers’ very first interactions with your product set the stage for what they’ll expect in the future. Wow them in the beginning and they’ll stick around for longer.
7. Go omni-channel
Snapfish’s goal is to make it easy for hobby and professional photographers to upload photos from their smartphones, computers, or social websites, then store, share, and create beautiful products as gifts for people all over the world.
A key goal for Snapfish was to optimize their omni-channel experience, so existing customers could upload from any device — computer or phone — then easily switch between platforms while editing. The hope was that adding this feature would reduce customer churn.
Product Manager Chelsea Heredia, was tasked with making omni-channel editing a reality. Chelsea utilized behavioral data from omni-channel analytics reports to identify, in real time, the areas where customers were abandoning their projects. She made sure to see exactly how many customers were going back to projects they saved in the app and eventually moved on to make a purchase.
What she soon realized was that tons of user data was getting lost between the company’s website and connected apps. Once she identified the gaps, she set about improving the data flow, so that customers could start editing on any device and finish on any other.
The result has been a large decrease in people abandoning projects when switching devices. Which means … loyal customers and improved retention.
8. Simplify internal reports
E*TRADE started in 1991 as a website that made buying and selling stock on the internet more convenient. Today, the company helps millions of users manage stock portfolios, do online banking, and receive financial advice, among many other services.
The analytics team at E*TRADE serves other business units within the company (marketing, product, customer success) by answering their questions about their large array of products and services. Like many other companies, they were frustrated with the limited amount of information they got working with legacy analytics tools. E*TRADE’s Head of Customer Experience Analytics claims that managing legacy tools used up half his team’s bandwidth due to the amount of time spent implementing tags that didn’t quite fit what the team was looking for.
So how did E*TRADE fix the problem? They simplified. Rather than try to give every team every random piece of information they collected, they streamlined reports to meaningful deliver information on user behavior, without a lot of excess.
As a result, teams can now focus on the important aspects of the customer experience, particularly the ones over which they have influence. This keeps teams less distracted by unnecessary information, and better able to solve meaningful customer problems.
How does this help with retention? Well, customer satisfaction isn’t always about solving customer problems directly. It can also be about solving internal problems that give teams the capacity to focus on other parts of their role within the company.
9. Keep up with customer feedback
Chubbies is a modern men’s fashion brand and eCommerce company that makes clothes for men to wear after work. As a company that prioritizes the relationship it has with its customers, Chubbies takes a data-driven approach to its customer experience.
A great example: Cyber Monday, an important day for all eCommerce companies. A successful marketing strategy meant a lot of traffic – which in turn meant all hands on deck making quick decisions to make the most of the day.
Even in the first hour, Chubbies’ merchandising team noticed that the sports category was producing the highest value orders. This was abnormal for a company known for their khaki shorts. So the team decided to flex heavily into sportswear, and by the end of the day, it was their leading category.
Even more: on Cyber Monday, customers could select a free gift with their order, with higher cart values unlocking better gifts. By examining what options people interacted with before selecting their gift, the team was able to quickly shift gift ordering and tiers to improve conversion rates.
Sometimes keeping customers engaged over time is about moving quickly to satisfy their needs, as those needs develop. By examining the data as it comes in, you’ll be better able to give the customers the experience they want.
10. Segment your users
Freshworks makes cloud-based customer support software that helps over 150,000 organizations streamline customer conversations, automate repetitive tasks, and resolve issues faster.
As the team worked on turning more trial customers into paid customers, they realized they needed to reorganize their onboarding process. To do this, the team started looking for clues on which features were working and what needed to be revamped. Using their analytics tools, they aggregated data by customer properties (such as company size), started monitoring daily, weekly, and monthly paying user trends, and segmented its customer base in many more ways to figure out adoption rates among different groups and to see who completed various user flows.
In addition to these, Freshworks started monitoring customer segments by geography, so they could identify where revenue came from, where churn was highest, and who were the top customers in each region.
This information turned out to be crucial for retention, as it let Freshworks focus on the customers who produced the most revenue, as well as to better fix their user flows to increase customer retention rates across groups.
Want to get more users to the features that matter most to them? Try segmenting them to find actionable information.
Learn more about behavioral segmentation.
How Heap helps with your customer retention strategy
As the examples above show, improving retention is all about delivering an experience that keeps customers returning to your product or site. The best way to do that? Measure what they do (and don’t do) while there, then use that information to improve the experience.
Heap is the only analytics platform that automatically captures all customer behavior — every click, swipe, pageview, formfill, and more that customers take on your site — and organizes that data so you can extract insights and act to meaningfully impact the experience customers have on your digital site. There’s no need to involve engineers, and no worries about missing behaviors because you can’t track them.
For the companies listed above (and many more!), Heap is critical for making data-based choices. With Heap your team can answer questions like:
What behaviors drive conversion, repeat purchase, and brand loyalty?
Does leaving reviews or reading reviews generate higher order values?
Where should I allocate my spend based on channels that drive the highest LTV?
What site experiments influence the highest repeat purchase rate?
What portions of the buying journey are opportunities for wins via A/B testing?
To learn more, download The Heap Guide to Retention.
Interested in a demo of Heap’s Product Analytics platform? We’d love to chat with you!