Many startup founders and marketing leaders secretly worry about how to improve user retention. It is much more difficult than attracting them initially, but improving user retention is something that companies should put a bigger focus on.
After all, it’s often far more cost-effective to keep existing customers happy than to constantly chase new ones. Research indicates that acquiring a new customer is four to five times costlier than retaining an existing one.
Table of Contents:
- Why Focusing on Retention is so Valuable
- User Onboarding, A Game Changer
- Ways to Keep it Fresh and Valuable to Customers
- Give Power With Personalized User Experience
- Customer Support Makes the Experience
- Foster a Real Community Around Your Product
- Conclusion
Why Focusing on Retention is so Valuable
The numbers tell a compelling story. A small 5% boost in customer retention can lead to a profit increase ranging from 25% to a staggering 95%.
Existing customers are also easier sales. The chances of successfully selling to an existing customer hovers between 60% and 70%, but trying to win over a new prospect drops that probability to a mere 5% to 20%.
So a strategy to improve user retention will give many advantages to the business. Beyond just the direct financial benefits, it creates more brand loyalty and more profits.
Build Brand Loyalty
Think about the brands you consistently use. It is often due to years of positive experiences that make it a default choice.
Building a customer base that deeply connects with the company brand does amazing things for user retention. This strong relationship reduces how many will look at your competition.
It builds advocacy that generates powerful word-of-mouth referrals and saves you massive amounts on future user acquisition efforts. Trust plays a pivotal role, with 88% of customers citing it as the crucial deciding factor to improve user retention.
Drive up your Company’s Profit Margins
Companies can drastically improve profit margins just by increasing customer retention; it is very powerful. Existing users are usually less price-sensitive and have already developed trust.
With this strong foundation, it will provide better upsell opportunities and cost-efficient transactions compared to new acquisitions. Think of a snowball getting larger; these repeat purchases drive sales.
User Onboarding, A Game Changer
The initial onboarding experience is make-or-break for user retention. Users want to quickly grasp your product’s core value.
An example of a great user onboarding strategy that is aligned with your overall business strategy is the one that Pepper does; they ask you to take a quick quiz. This makes them better retain users in an actionable way.
Another great example is the international beauty brand, Sephora, has their Beauty Insider Program. Sephora launched the loyalty program to reward customers based on purchase, providing valuable information to better help onboarding.
Guided Tutorials: Walk Users Through Key Features
Many struggle in understanding where to even start with an overwhelmingly complex piece of technology or product. By doing step-by-step walkthroughs and interactive guides, new users feel more confident about continuing with a platform.
They can even use more tools like tooltips. These are little tips that come up when you click an area in an application, to further educate you on what it does. Guiding them will build that customer loyalty you’ll need.
Don’t Throw Too Much Too Fast at Users
Resist the urge to bombard new users with every single feature at once. It will create confusion for users and ultimately push them to use something simpler.
Focus instead on delivering core value as quickly as possible, which includes saving users time, which brands like the freemium app Blinkist understands very well. Show off only the essential features during initial user onboarding to improve user retention.
Create Onboarding Customized for Each User
Cookie-cutter onboarding processes often fail to resonate with diverse users. Consider the role or background of individual users.
This is one thing a majority of software companies have in common with regrets. Software buyers reported much higher regret.
Personalizing user onboarding is how you win a customer and encourage repeat purchases. Adapt the user onboarding journey to better improve user retention, with an easier starting point.
Ways to Keep it Fresh and Valuable to Customers
Delivering continual value keeps users engaged, including active users. But doing nothing can make that harder to do for the long term.
It will let the door open for people to move to your competitor if they are not engaged. Companies need to do proactive changes to their apps with better ways to navigate the website.
Regular product updates and enhancements need to happen. Businesses also have to address critical user issues to keep customers to build more loyal customers.
Gather that Crucial Feedback Loop
User feedback isn’t just nice to have; it’s core. Feedback drives updates and shows users that their opinions matter, leading to better customer satisfaction. It leads to a more invested relationship and drives future business growth.
Customer churn costs companies billions of dollars a year. It adds up to around $168 Billion per year. The cost can impact many companies and keep them from taking things to the next level.
The key here is using methods like user surveys, listening to calls with customer-facing teams, and running focus groups. The companies will get the raw feedback necessary to improve their systems for users, reduce customer churn, and work on customer retention strategies.
Adapt to their Changing Expectations
You have to recognize the software or service that people used initially could drastically change. Things will also feel older if users can find a more recent app to better improve user retention and meet those changing needs and customer expectations. You do this by adding upgrades based on the critical user feedback provided.
Some companies have to get over their hesitation of going big. That should never stop companies from staying agile, but they still must consider changes carefully.
Never Assume that the Old Features Are Fine
Companies should never assume older features are perfect just because they existed before, even if they were amazing originally. User expectations, technology and just overall markets shift over time, forcing everyone to react.
Even successful companies aren’t immune to that. Some companies have had it worst, with numbers like the overall market in the first month of user dropoffs being 40% for user retention.
So it makes sense to focus your initial upgrades based around older things you do. Take an objective look at your older products and identify what needs more modern development.
Businesses must consider that to continue long-term growth. A 2020 study on Customer Retention strategies has shown this.
Most people focus more on customer acquisition, where customer retention is much more crucial for most of your companies sales. The data they gathered show that just under 80% will derive for 20% of their customers, making it a clear winner for focus and impacting the customer lifetime value.
Give Power With Personalized User Experience
Today’s users don’t settle for experiences not customized for their role. Many expect brands to do it.
Tailored messaging and features have far better success. Businesses will ultimately create much higher loyalty and increase the usage rates across their various types of applications, and their customer base will grow for that business as well. The mobile app industry have things at stake; they have a user retention rate after just a month around 5%.
By focusing on personalization, you avoid turning off many of your customers. Here is a great little table below about mobile industries that need personalization:
| Mobile Industry | Day 30 Retention |
|---|---|
| Average of All | 5.6% |
| News and Magazine | 9.1% |
| Digital Banking Apps | 10.2% |
| Education | 2.5% |
| Health and Fitness | 4% |
| Business Apps | 5% |
Content that Adapts to User’s Preference
Give users content that actually resonates; the customer feels like the business actually gets them. It might be personalized emails based on their past actions or just the general theme in their style preferences.
Imagine this great user onboarding experience: users automatically find the things they want without constantly hunting through the noise. Those companies can take advantage of doing it better to provide even higher quality in service, all on the first day, with day retention being the key area.
Build Customized Settings for Control
Put users in control of their digital experiences with how everything will feel and look. This might mean dashboards, letting users choose the level of detail and complexity in reporting or even just the theme for how an app looks.
Control goes to the overall sense. A platform truly works for them in an authentic manner for businesses in several major key areas.
Doing all that drives even higher overall adoption of various applications. Good customer experience leads to better user retention rates.
Use Analytics to Anticipate Needs
Go beyond basic customization; it gets them through day-to-day operations. Use user-data trends, which can highlight what features specific customers tend to overlook and guide them for their next upgrade or enhancement.
You’ll ultimately improve your overall approach when done effectively. Consider sending tailored push notifications that offer very specific insights or highlight an opportunity to get far better insights.
Customer Support Makes the Experience
Even amazing products run into user roadblocks. Companies get into problems if they can’t handle technical or more personal inquiries properly, and address their pain points.
They end up needing much higher resolution, in an era of customer demand. Improving customer service leads to better customer retention.
The faster customers have to reach customer care centers, is another area to worry. When users don’t receive any immediate support, that’s when they move over to a different option.
Use AI and Automation for Easy Access to Resources
Immediate responses don’t always need to get handled by a human representative. Think of chatbots and automated systems; companies have instant answers.
Push notifications is another useful technology, as those see even greater conversions than typical communication methods. Many have reported around a 54% conversion for customers that get one, just as they open your message or post, which can drastically impact things.
That ultimately takes pressure off your human team to have better complex problems or those who truly prefer communicating with real support staff. Companies that have the ability for instant messaging, like chatbots, or something built-in with frequently asked questions will ultimately improve things for businesses. The technology frees up other team members.
Give Real People to Speak to
Don’t try getting fully automated when handling sensitive matters or problems that are more critical in nature. Have that customer go into personalized human interaction, rather than giving the customer some annoying scripted bot response.
Things are also better if those responses provide better-personalized data, as studies have reported.It will drive more trust, and those are things people crave from most services.
By combining both, you show both efficiency and empathy. This will improve the overall customer lifecycle.
Don’t Be Afraid to Use Push Notifications to Give People Support Options
Many are used to companies doing email communications for important notices. Consider taking advantage of Push Notifications to have better alerts on various devices.
People who get segmented messages based on preference for each of the major groups of their customer, ultimately create higher conversions from more engaged users. Push notifications see conversions much more, from all users who have it open.
Make sure to never underutilize features that do improve overall communication and user growth. Think about ways to get the push notifications to those devices immediately based on user type. You can even make the alert to trigger some incentive or a small promotional bonus to encourage the user to respond.
Foster a Real Community Around Your Product
Humans by nature crave connection and belonging; this gets deeper with products and services used on a daily basis. Some companies have communities that become part of how things function with platforms like Snapchat, that incentivize users to communicate with each other through features like Snap Streaks that only stay active by regular communication.
Think outside the actual product to get it to go. Companies that build spaces (either online or physical) foster sharing by using their products and will improve user retention for everyone involved.
You might even get new customers in this way through references, especially if there is some great user incentive provided. Building a community creates customer loyalty.
Even the gaming community has jumped on that by doing communities with Civitai, who used leaderboards to motivate creators. Having regular, constant discussions online around specific areas on social media, create more feedback.
A place for people to share, vent, or talk has seen huge gains. It’s important to just know how much higher returns come just for putting your time in the product that needs higher rates of users who get invested into your company, and even more when you are considering 40% of them make even more reorders in that time according to Klaviyo for many retailers.
Turn Customers into Loyal Members
Recognize your most loyal and valuable customers who go way above average users in your base. Create a reward and perks system for loyalty, whether that means you give a discount, something as basic as giving out gift cards or coupons for your store, will go further. Businesses could even provide a ten dollar coupon with no restriction; a good loyalty program goes a long way.
You want things personalized like studies point out. These programs have an initial challenge to win loyal customers to increase revenue to a very high degree.
A case study on that from Shopify, even had a client make huge yearly increases, all because of using things on a given weekend when doing the campaign by over 170%. Make customers have a strong attachment by creating opportunities that involve meeting, which could range in areas from exclusive forums.
When you foster a group experience, customers who use the platform for feedback and interaction will naturally connect far beyond than standard. Those strong ties then give companies much higher retention, and customers spread far.
Make Customers Feel Invested With Co-creation
Give those key members the platform and space. It provides valuable, even transformative insights with better solutions to increase sales.
Businesses could have those clients become brand ambassadors, by building programs with their customers. It takes collaboration on the product, with many companies making communities for several conversions just in a matter of days.
The businesses will get stronger partnerships. Your entire user base will benefit when you go down that route for most things. Monitoring the right retention metrics helps guide you on your product strategy.
Something clothing retailer, Chubbies have even made it more seamless. Providing an amazing system that lets customers try free returns with more refunds if they don’t love the product, to ease them.
Conclusion
Movies that focus on a doomsday of technology taking over humanity through nefarious means and things like AI and Robots have all skewed this idea that everything AI-driven must lead to dystopia. The reality is that companies are using those same types of technologies to improve user retention in new and meaningful ways.
This ranges from making life easier through assistants to catching scams far before they actually happen to individuals. All this leads to an environment where retained users see long-term benefits for working with you.
Businesses should never ignore customers in these types of technologies. The research over the course of years by companies has shown that they’ve made it better, all over various eras for many technologies as an example.
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