{"id":12818,"date":"2017-06-07T17:30:17","date_gmt":"2017-06-07T16:30:17","guid":{"rendered":"http:\/\/blog.intercom.com\/?p=12818"},"modified":"2020-07-31T23:21:02","modified_gmt":"2020-07-31T22:21:02","slug":"acquisition-easy-retention-can-be-too","status":"publish","type":"post","link":"https:\/\/www.intercom.com\/blog\/acquisition-easy-retention-can-be-too\/","title":{"rendered":"If acquisition is easy, retention can be too"},"content":{"rendered":"<p class=\"opening_paragraph\">Peter Drucker once said the only purpose of a business is to make and keep a customer.<\/p>\n<p>For the past decade, software companies have been pretty good at tackling the first half of Drucker\u2019s statement \u2013 how can we get as many customers as possible to use our product? The next ten years will be defined by the latter \u2013 now that we\u2019ve got these customers, how the hell can we get them to stick around?<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">A cool new messaging app getting to 1m users is the new normal. Keeping them, and getting to 100m, is the question.<\/p>\n<p>\u2014 Benedict Evans (@BenedictEvans) <a href=\"https:\/\/twitter.com\/BenedictEvans\/status\/579770823868825602\">March 22, 2015<\/a><\/p><\/blockquote>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Hiten Shah wrote an excellent piece recently about the <a href=\"https:\/\/producthabits.com\/acquisition-is-easy-retention-is-hard\">growing challenges of customer retention<\/a>. Increased competition, low switching costs and cheaper distribution has meant the cost of keeping customers is starting to far exceed the <a href=\"https:\/\/www.intercom.com\/blog\/what-is-customer-acquisition-cost\/\">cost of acquiring them<\/a>, citing our platform approach as one of the ways SaaS product can increase retention. Hiten\u2019s piece looks at how your product can foster retention there are more immediate tactics that can help with customer retention.<\/p>\n<p>Although retention programs can take startups years to develop (if you want to get started, Des wrote an excellent primer on <a href=\"https:\/\/www.intercom.com\/blog\/retention-cohorts-and-visualisations\/\" target=\"_blank\" rel=\"noopener noreferrer\">calculating your retention rate<\/a>) there are some very basic measures you can take today to kickstart yours, and start growing your active userbase. Gamification, hacks, and promotions can all have great short term effects, but one thing that tends to work very well is lifecycle messaging: contacting users with messages that they will get value out of, based on their actual experience of using your software.<\/p>\n<p>For example, you could imagine a project management app sending a \u201cGetting Started\u201d guide to someone who had not created a project after a week, but also sending a \u201cHow To Work With A Remote Freelancer\u201d guide to someone who is actively using the product in a particular way in the weeks following that.<\/p>\n<p>Best of all, to create these message schedules you don\u2019t need a \u201c<a href=\"https:\/\/www.linkedin.com\/pulse\/retention-hacking-growth-nikos-sarilakis\">retention hacker<\/a>\u201d. You definitely don\u2019t need a \u201c<a href=\"https:\/\/medium.com\/@retentioneer\/retentioneer-is-the-new-growth-hacker-ccad6799d328\">retentioneer<\/a>\u201d. All you need is a few hours to create a simple series of messages that will pay back many times over.<\/p>\n<p class=\"quote\">Unless you\u2019re showing your users continued value, there\u2019s always someone waiting to steal your lunch<\/p>\n<h2 id=\"the-3-stages-of-retention-messaging\">The 3 stages of retention messaging<\/h2>\n<p>The path from new user to power user is a circuitous one. It\u2019s a series of fragmented moments that doesn\u2019t always occur in a predictable order or according to a timetable. Pretty complicated, right?<\/p>\n<p>That\u2019s why the simplest way to understand retention is take <a href=\"https:\/\/labs.openviewpartners.com\/retention-optimization-is-king-of-growth-strategy\/#.WTBEJhPyvUI\">Brian Balfour\u2019s advice<\/a> and to break retention into three stages:<\/p>\n<ul>\n<li><strong>Early retention:<\/strong> new users need to be onboarded into important actions in your product<\/li>\n<li><strong>Mid-term retention:<\/strong> existing users need to be engaged to go deeper into the product and build habits that stick<\/li>\n<li><strong>Long-term retention:<\/strong> seasoned users need to become loyal customers through constant realization of value<\/li>\n<\/ul>\n<p>The best part of breaking retention down like this is that while you must keep the overall goal of success in mind, you only have to solve for one stage at a time. This makes creating those lifecycle messages easier, more targeted and subsequently much more effective.<\/p>\n<h2 id=\"early-retention-inspiring-the-aha-moment\">Early retention \u2013 inspiring the \u201caha moment\u201d<\/h2>\n<p>Most of your <a href=\"https:\/\/www.intercom.com\/blog\/churn-retention-and-reengaging-customers\/\" target=\"_blank\" rel=\"noopener noreferrer\">churn<\/a> happens in the first seven days; it\u2019s the nature of the beast. People get curious, kick the tires, shrug their shoulders and leave without saying goodbye.<\/p>\n<p>That\u2019s why when someone signs up to your product, it\u2019s important to make sure they\u2019re seeing the value of your product right away. In software it\u2019s called the \u201c<a href=\"https:\/\/headrush.typepad.com\/creating_passionate_users\/2006\/11\/cognitive_seduc.html\">aha moment<\/a>\u201d. It&#8217;s the moment when the value of your product becomes crystal clear to the user. They say, \u201cAh, now I get it!\u201d.<\/p>\n<p>New users can only get value from your product by performing valuable activities. For Facebook, it\u2019s getting new users to <a href=\"https:\/\/genius.com\/Chamath-palihapitiya-how-we-put-facebook-on-the-path-to-1-billion-users-annotated\">add 7 friends in 10 days<\/a>. For Dropbox, it\u2019s getting new signups to put one file in one Dropbox folder. Your most committed and diligent customers will do this by themselves, but many others will require a little nudge, if not outright persuasion. And messaging is the highest leverage tool at your disposal here.<\/p>\n<p>Just look at this email Buffer sends to new users. Their browser extension makes it easier to share items you\u2019ve found while browsing. New users who fail to install the Buffer browser extension won\u2019t share as much, they won\u2019t experience the full value of the product, and are therefore more likely to churn.<\/p>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2017\/06\/Buffer.png\" \/><\/p>\n<p>Getting new signups to perform one high value activity won\u2019t guarantee a churn-resistant product, but it\u2019s a much better place to start than the \u201clet them come in, kick the tires, cross our fingers and hope they stay\u201d philosophy employed by many SaaS businesses.<\/p>\n<p>(<strong>Side note:<\/strong> If you\u2019re unsure what your own product\u2019s \u201caha moment\u201d is, <a href=\"https:\/\/www.intercom.com\/blog\/day-zero-a-new-way-to-define-customer-success\/\" target=\"_blank\" rel=\"noopener noreferrer\">read this<\/a>.)<\/p>\n<p class=\"quote\">No trigger, no action, no habit, no retention<\/p>\n<h2 id=\"mid-term-retention-encouraging-habits\">Mid-term retention &#8211; encouraging habits<\/h2>\n<p>Apple. Facebook. Twitter. Google. Pinterest. These companies all have one thing in common \u2013 they create habits among their users. If you\u2019re like me, you probably use these products so much that it\u2019s hard to imagine life before they existed.<\/p>\n<p>So how do you create these habits in your own product? If you haven\u2019t already, I\u2019d highly recommend reading <em><a href=\"https:\/\/www.nirandfar.com\/hooked\">Hooked: How to Build Habit-Forming Products<\/a><\/em> by Nir Eyal. His research says every habit-forming loop begins with a trigger: the spur behind a new behavior.<\/p>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2017\/06\/If_Acquisition_Can_Be_Easy_Inline_04.jpg\" alt=\"Nir Eyal - hooked canvas\" \/><\/p>\n<p>These triggers can take many forms, notifications, reminders etc \u2013 but emails and <a href=\"https:\/\/www.intercom.com\/blog\/in-app-messaging\/\" target=\"_blank\" rel=\"noopener noreferrer\">in-app messages<\/a> work particularly well. Take this example from White Label Dating.<\/p>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2017\/06\/If_Acquisition_Can_Be_Easy_Inline_02.jpg\" alt=\"White Label Dating\" \/><\/p>\n<p>As a dating website, if someone doesn&#8217;t keep an up-to-date profile, they stand a very poor chance of generating any romantic inquiries. Nobody falls in love with an anonymous avatar. So crafting an email (or, even better, an in-app) around getting people to do these important actions is a very, very good idea. No trigger, no action, no habit, no retention.<\/p>\n<p>Remember, the success of your triggers rely on going deeper than shallow notifications and nudges. Rather than sending an email with a flimsy command like, &#8220;You haven&#8217;t uploaded a photo yet \u2013 please come back!&#8221;, appeal to the value someone would receive out of doing so. Nobody is intrinsically motivated to complete their profiles or come back to the product itself \u2013 they\u2019re motivated by what they can do and get out of it. Retention messaging won\u2019t work without connecting back to the user\u2019s intentions and goals.<\/p>\n<h2 id=\"long-term-retention-keeping-the-spark-alive\">Long-term retention &#8211; keeping the spark alive<\/h2>\n<p>If you\u2019re lucky enough to have developed a large cohort of power users, you might be tempted to give yourself a pat on the back and call it a day. Big mistake. Software is a dogfight. Unless you\u2019re showing your users continued value, there\u2019s always someone waiting to steal your lunch.<\/p>\n<p>There are many strategies to help you achieve this \u2013 gamification, retention hooks, rewards, milestones etc \u2013 but the most successful strategy I\u2019ve come across are referral programs driven by, you guessed right, messaging.<\/p>\n<p>Popularised by Dropbox, referral programs might look like an acquisition strategy, but the benefit can go way beyond that. Take the below example from Airbnb. <img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2017\/06\/If_Acquisition_Can_Be_Easy_Inline_03.jpg\" alt=\"Airbnb referral retention\" \/><\/p>\n<p>The benefit for Airbnb here is threefold:<\/p>\n<ul>\n<li>Trusty <a href=\"https:\/\/www.intercom.com\/blog\/word-of-mouth\/\" target=\"_blank\" rel=\"noopener noreferrer\">word of mouth<\/a> referrals results in new users.<\/li>\n<li>Habits begin to form as groups of friends begin relying on the same product.<\/li>\n<li>Two-sided referral programs encourage existing users to share, while simultaneously reducing risk for new users. (New customers get a $20 promo code, as do the referrers, a win-win situation)<\/li>\n<\/ul>\n<p>Messages such as these encourage habit formation with existing customers, while simultaneously acquiring new customers who have a high probability of repeating the behaviour of your most valuable power users.<\/p>\n<h2 id=\"turn-your-customers-today-into-customers-for-life\">Turn your customers today into customers for life<\/h2>\n<p>Remember those halcyon days when software was sold through licenses and you only had to win over each customer once to stay profitable? Those days are over. For today\u2019s software businesses, you have to win over your customers month after month just to keep the lights on.<\/p>\n<p>If you\u2019re really in it for the long haul, for customer retention and loyal users, then you should be throwing the kitchen sink at the people you care about the most: your users. No startup has ever died because they spent too much time talking to customers.<\/p>\n<p><a href=\"https:\/\/www.intercom.com\/blog\/books\/customer-engagement\"><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2017\/10\/Call-to-action-ad-for-blog-posts@2x.png\" alt=\"customer engagement\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Peter Drucker once said the only purpose of a business is to make and keep a customer. For the past decade, software companies have been pretty good at tackling the first half of Drucker\u2019s statement \u2013&hellip;<\/p>\n","protected":false},"author":161,"featured_media":12814,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"category":[12897],"tags":[88,200,199],"coauthors":[352],"class_list":["post-12818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","tag-churn","tag-messaging","tag-retention"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>If acquisition is easy, retention can be too - The Intercom Blog<\/title>\n<meta name=\"description\" content=\"For the past decade, software companies have been pretty good at getting as many customers as possible to try their products. 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