Chapter 5

Strategies to Improve Retention Numbers

Improving retention looks different across companies—a social media app will always be used more frequently than Slack. There isn’t one standard retention strategy.

But when it comes down to it, retention involves understanding your users actions and improving the user journey along the way.

Net Promoter Score (NPS) is one way to do gain a better understanding of your users actions. The Net Promoter Score (NPS) was introduced back in 2003 in a Harvard Business Review article.

It’s been referred to as “the one number you need to know to grow,” because it simplifies how to collect, analyze, and interpret customer success with just a single question:

“How likely are you to refer this [product/company] to a friend or colleague?”

Answers are given on a scale of 1 to 10.

Scores zero to six are detractors, with a negative point value. Scores seven and eight are Passive with no point total. And only nine or ten are Promoters with a positive point value.

The Detractors are unhappy with your product, most likely to churn in the not too distant future. The Passives are neutral. There’s not much keeping them from switching to a competitor or alternative if given a chance.

While the Promoters are the ones who will recommend your product to their friends, family, and colleagues.

The Net Promoter Score excels because it takes something incredibly difficult, like customer unhappiness that leads to churn, and boils it down to a single number.

That number differs depending on your business and industry.

Like most metrics, it’s most helpful to measure over time against your own historical score. However, the organization behind it does provide a few simple benchmarks. “Software & Apps,” for example, have an average score of 28 across the board.

To improve your NPS, assess customer feedback and change the product to align with the user’s needs. And, that’s just what Mailshake does.

Sujan Patel, Growth Marketer and Co-founder of Mailshake, shares insights into how they use their NPS scores.

He states ”We use NPS in a few different way. In looking through responses we often find small bugs or issues with customers that our customer support team solves. We also find feature request and improvements to make from a product perspective.”

If churn is a measure of customer happiness, Net Promoter score is like a precursor to churn. It can help you spot issues before they become problems.

There’s no silver bullet. There are, though, lots of little ones.

Groove iterated a ton of different strategies to increase their NPS score over the course of a few months. They also used an open-ended question at the bottom so people could leave detailed reasons behind the score they chose.

They were then able to pinpoint these key reasons and look at an overall view of what made happy customers, happy.

For example, 48% of the Promoters cited UX and simplicity as their favorite aspect, along with customer support as a close second.

Insights like this are invaluable because they help you identify core competencies. These are the areas your product outperforms the competition, which you should enhance and never complicate for fear of alienating the nucleus of your customer base.

At the same time, they help you figure out which positive aspects are less important. These are the ones you can iterate and test and modify to a greater degree.

Groove iterated on several product features and kept re-testing to see which changes had the greatest impact over time. Both as an aggregate NPS score, but also on an individual level with changes made during that time difference.

For example, one of the biggest recurring complaints they received focused on a lack of product updates. Some customers felt like features were beginning to lag behind the competition.

That gave Groove’s team a concrete characteristic to work on, improve, and retest again in the coming months to see how they did.

Another positive aspect they saw from constant product iterations is that price actually became less important to their customers.

Initially, it garnered a tiny mention. But over time, subsequent tests showed that it had fallen off people’s radar. Customers were no longer consciously thinking about it, which meant the likelihood of it becoming an objection had also fallen.

From June to September, Groove’s overall NPS score increased from 11 to 16. However, that in and of itself wasn’t the most helpful aspect of NPS testing.

Instead, it was zeroing-in on those individual characteristics that customers loved (or didn’t). And then constantly re-working them until subsequent NPS tests revealed improvements in each area. Together, those tweaks are what ultimately led to a five-point increase.

Groove’s experience jives with what other subscription-based product companies, like HubSpot, have also found.

You can (and should) tie product usage directly back to customer happiness. HubSpot even developed their own metric for it, CHI, or the Customer Happiness Index.

It was created by Jonah Lopin, formerly HubSpot’s VP of Customer Success. Jonah saw that “customers with the highest CHI scores get the biggest lift in traffic and leads every month.”

In other words, it wasn’t an accident that customer happiness for them was directly tied back to the success they were ultimately seeing with the product.

These customers also reportedly gave “the highest Net Promoter Scores and have the highest renewal rates”.

CHI works by assigning point values to different activities. These points are on a sliding scale, so less important activities receive fewer points than important ones.

For example, customers might get different point values for the number of times they publish blog posts or pages, tracking and reporting leads through the product, the number of social media messages sent, and more.

The process is similar to lead scoring in that sense.

Leading marketing and sales departments will often assign point values to leads based on the profile dimensions they match or certain behaviors they exhibit, like returning to the website multiple times during the course of the month.

This one simple number can then be used by salespeople to prioritize their efforts.

Prospects with a higher value are ‘warmer,’ or more likely to purchase. While those with lower values probably aren’t worth a one-to-one conversation just yet. They might require more scalable campaigns initially to warm them up first.

HubSpot has been able to analyze their thousands of customer over time to identify which trends result in the best customer success, which means traffic and leads.

HubSpot’s customers have high lifetime values, so they can also afford to invest in having Inbound Marketing Consultants, Account Managers, and a Support team help customers maximize CHI along the way.

They can even use the score as a predictor for churn, according to Jonah:

“We use CHI to see whether cohorts of customers are doing better or worse than the baseline. We use this approach to see whether experiments we may have tried in a given month are ‘working.’ One could measure something like customer retention in this context, but then you’d have to wait a year or more to see how the cohort does. CHI gives us a valuable leading indicator to see whether changes in the business are having positive effects or not, so we know whether to double down or divest ourselves of those strategies.”

HubSpot’s internal team can see who’s CHI is lower than normal and reach out to help.

If certain outcomes are low, like the closing rate from leads to sales, they can back up and tie it to individual activities or campaigns that the customer isn’t running. In that sense, they’re able to quantifiably define ‘customer success’ to know when it’s happening, or take action when it’s not.

Jonah recommends all product companies tie an overall score back to product usage, and then segment campaigns accordingly.

For example, you should be able to see verifiable signs of neglect, like low campaign activity, stories read recently, a profile that’s incomplete, and other leading indicators of apathy.

Audible customers, for instance, purchase ‘credits’ with their monthly subscription. Each month, they receive X number of credits based on the plan they purchase.

So are people redeeming those credits for content each month?

That’s the key question for their team.

If they aren’t, it means they either have forgotten about the product or are unhappy with the selection. Neither option is good because it means the chances of them canceling their accounts are higher than average.

But if you identify them ahead of time, you can send reactivation campaigns to win them back. Audible will periodically send out offers like the example below, with time-based limits to create urgency, for people with unused credits in their account.

You can even change the offer by the number of unused credits. One or two unused ones means someone may have only missed a month.

Their offer, therefore, might be less than someone with six months worth piling up in their account.

Customers with low NPS or activity-based scores can be automatically segmented by most marketing automation software.That way, offers are sent out automatically if customers do (or do not) respond to these campaign offers, similar to steps taken in the Activation stage.

Messaging can be combined across channels to use other indicators, like time, to trigger.

This is where upselling comes into play. SaaS companies have seen as high as 35% ACV from upsells. They are the “Holy Grail” to SaaS companies.

In your upsell emails, tailor your messaging to increase urgency. Urgency has the power to increase sales over 300% when used correctly.

It creates an artificial deadline for users, leveraging the fear of missing out, so they take advantage before the offer goes away.

In-app messaging is a perfect vehicle for timely notifications because it can be triggered to react instantly to what someone is (or isn’t) doing.

Most automation software can go outside, to SMS and direct mail, too.

SMS open rates are nearly 99%, meaning almost every prospect will read and react. Providers like TextMagic or Twilio can leverage scores inside your customer database to send automatically.

60% of direct mail recipients will reportedly visit a website being promoted, according to a study conducted by the USPS.

And new platforms like Lob make direct mail insanely easy with a programmable API to tap into.

Customer segments can be integrated with social retargeting campaigns, so the most appropriate messaging is personalized on Facebook, Twitter, or LinkedIn.

Facebook has custom audiences that can help you run similar re-engagement campaigns to people who’ve signed up but haven’t logged in or completed X, Y, Z tasks over a period of time.

These even work with MailChimp.

Messaging will change based on someone’s list membership status, activity, whether or not they take you up an offer, or if their NPS score has improved over a certain threshold.

Meanwhile, Twitter has Tailored Audiences, while LinkedIn has Matched Audiences. Different names, but the same overall premise.

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:

  • 1

    Upsells into a higher plan value

  • 2

    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:

  • 1

    Web Content: $59

  • 2

    Print Edition: $125

  • 3

    Both Web & Print: $125

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.