What is customer retention?


User Retention as a Service

by Colin Nederkoorn

Here’s a trick question for you: “What’s the cheapest way to get a new user?”

If right now you’re thinking about the price differentials between Facebook Ads and Google Ads, you’re doing it wrong.

The cheapest way to get a new user is to fix that giant gaping hole in your bathtub that leaks users after they sign up and before they become valuable.

Remember: Your job doesn’t end when someone gives you their email address

User acquisition is easier than user retention

Facebook and Google have built fantastic tools to help you understand how well your ads are driving clicks and even conversions to a sale. But most companies are about relationships, not transactions. And ad platforms just feel transactional and even a little sleazy.

But, people use them because they are easy to set up, easy to understand and easy to show results with. They just cost you.

Traditional strategies for retention

In the early days of a company, it’s common for the CEO to email every new person who signs up at one time or another. They check to see if they need help and if they got stuck. The CEO might reach out if someone created an account but hasn’t done anything. As companies grow, this behavior stops.

A good rule of thumb is to do things that are not scalable first - like reaching out personally. But then what? It’s all too common that these highly personalized interactions stop as a company grows.

Automatic emails to the rescue

Automatic emails can let you scale the personal touch of those early emails to a great scale. Done right, they feel unique, personalized and not like a marketing email.

Customer retention email examples:

  • The user got stuck setting up the product.
  • The user hasn’t been back an a while.
  • The user viewed the upgrade page, but didn’t upgrade
  • A few more days left in the trial
  • User hasn’t uploaded a photo in 1 month.

Want more? Here are some great user retention email examples from real companies

How well do customer retention emails work?

Here are some stats from email marketing reports:

  • Bank of America report that event-based trigger emails are 250% more effective than broadcast promotional emails
  • VIE at home get £250 in revenue for every £1 invested on abandoned shopping basket emails
  • 75% of registrations for Roku’s referral program are driven by triggered emails to new customers
  • People who purchase after getting cart abandonment emails spend 55% more than those who buy straightaway
  • “Happy Birthday” emails from Epson produce 840% more revenue per email than the overall email program
  • Gaylord Brothers convert half of their cart abandoners using multiple message remarketing emails
  • Trigger emails sent after relevant on-site searches got 200% higher open rates and 50% higher CTR than LowFares.com’s standard newsletter
  • One study found abandoned cart mails getting 20 times the transaction rates and revenue of standard email campaigns
  • Tafford Uniforms earn 20% higher revenue per email from post-purchase survey emails than through standard broadcast messages
  • S&S Worldwide drive 40% of email revenue through trigger/transactional emails that account for just 4% of email volume

Create automatic emails

The first step with creating automatic emails to retain customers is to figure out where the sticky points are. One great thing to do is to map out your signup / key flows in your product and identify how many people are stuck in those different parts of your product.

Once you have your users in clearly defined groups, it’s a little easier to think about how to target an email to that group when an issue occurs. For example: A “paid user” (group) “hasn’t been back to the site in 3 weeks” (trigger). I’d consider this user an “At risk user”. They are paying you but not using your product. They’ll probably cancel unless you establish the value of your product with them.

Your product is full of opportunities for highly targeted messaging to engage your users more.

How to set up automatic emails

I’m not going to lie to you. This is a hard problem to solve. Most companies spend months building tools for lifecycle emails if they do anything at all. But what happens as your product evolves. You have to go back in and spend more months to update all the lifecycle emails.

The ideal situation is to have a tool thats easy for a marketing / community manager to define business rules and update the email copy. They might want to test new emails and turn off poorly performing ones. They may want to tweak copy and test one version against another. You could build all this yourself. Or you could build just a few emails. Or you can use a third party.

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