During their NPS testing, Groove found that the second-biggest reported benefit was their customer service.
Peter Drucker once said the purpose of a business is to make and keep a customer. That means the intangibles around your product, besides just the features, can also impact customer success (and therefore, churn).
You must take steps to create real connections before you can have loyal customers.
One way to do this is by surprising and delighting your customers.
Investing in people can only take you so far, especially with a lower ARPU. However, you can use technology to help you scale people.
79% of people prefer live chat over email and phone for customer support. One big reason is that it only takes 42 seconds to resolve issues in one study.
But the true power behind options like Drift and Intercom is their ability to use conditional filters and branching similar to automation programs.
For example, you can use triggers like someone’s website activity and visit frequency to route messages to certain individuals or even reply for you with auto-replies.
You can also use bots not just to recommend a knowledge base link, but solve someone’s problem or question in real-time.
That’s why Help Scout integrated with Slack to see real-time notifications of what's happening on the customer end. They improved their response time by 340%.
There is almost no better way to increase customer happiness than to solve someone’s problem as quickly and thoroughly as possible.
Ben Carpel, CEO of Cyfe, solves problems during their onboarding process. They provide one-on-one training sessions to gain real-time feedback.
He says, “These sessions have even produced some great ideas for interface changes that proved to be extremely sticky over time, and we all know how important product stickiness is for growth.”
By keeping your customers happy, you can reduce churn and increase retention. Just look at the most hated companies, like airlines or utility companies, as the corollary.
So far we’ve focused almost exclusively on the churn side of the equation.
That’s because the best way to retain customers over the long haul is to limit or decrease the aspects that lead to churn.
However, this is only half the battle when you’re trying to increase all of the retention metrics we analyzed earlier. Specifically, the revenue half has been left out.
If you can do things to increase your revenue per customer, you can ‘accept’ a higher churn rate.
That doesn’t just include raising prices for new customers, either. The Quick Ratio, if you remember, also accounts for ‘expanding’ or increasing rates for existing customers.
That breaks down into two components, typically:
Upsells into a higher plan value
Repurchases or cross-sells into supplemental revenue
A simple way to accomplish the first point is to segment plan pricing based on company criteria. For example, you can isolate specific features in higher plans or use the total number of users per account to increase pricing. If a company grows and wants to double their user count, pricing will rise proportionately.
Some product companies, like Moz, will also provide supplementary training services. These can act like additional product lines most existing companies could purchase, thereby increasing ARPU like magic.
There is one final trick into upselling and cross-selling existing customers: Tripwires.
These are like ‘too good to be true’ offers that people can’t pass up. You actually already saw an example of this, too, used by The New Yorker, in chapter three.
Here’s what their current pricing page looks like again:
First, they’re giving new readers an exclusive offer that breaks down to only $1 per week. Almost everyone can easily afford that.
But they’re also applying that offer to all plans, making it easier for you to commit to the ‘Print + Digital’ offering, which is uncoincidentally their most expensive plan overall, too.
Tripwire offers aren’t some new, flashy tactic that online info-marketers just came up with to pull the wool over unsuspecting customers, either. Companies have been using them for decades as a legitimate lead generation tactic.
Here’s one example from the 1960s:
And it turns out that there’s solid science behind The New Yorker’s pricing strategy.
Dan Ariely shared findings from a pricing experiment he ran with The Economist in both in his Ted Talk and his popular Predictably Irrational book.
First, they offered three different plans with the following pricing:
Unsurprisingly, almost everyone who purchased (84%) chose the Print and Web subscription because it was seen as the ‘best value.’
However, something interesting happened when they removed the Print-Only option. In this case, only 32% chose the new combined value, and the majority (68%) downgraded to the Web-Only version. Just the plan pricing alone impacted their perception of value.
The ‘biggest’ plan that combined Web and Print content acted as a price anchor. It helped shape customer’s expectations of value. Another tactic to use when pricing, is to label your customers with a positive trait. Buffer does this on their pricing strategy. They refer to their premium customers as “awesome” members.
And as we’ve discussed, expectations are everything.
If customers don’t feel like they’re getting good value for their money, they won’t stick around. Or worse, they’ll choose a lower plan to begin with.
The other side to maximizing your retention metrics is to unveil plans and organize pricing that encourages people to spend more, more often. In addition, your product’s reliance on low churn will also be loosened at the same time.