How to resurrect your customer retention after COVID knockdown
Most of you might heard this quote from Mike Tyson-
Everybody Has a Plan Until They Get Punched in the Mouth.
For some of the businesses, 2020 was a hard, unexpected hit right between the eyes.
You might be tired of all the COVID-related things. True, it’s overwhelming. But just because you pretend it’s not there, doesn’t seem the best approach? I see a lot of companies and teams working hard to adopt to the new normal. But my expectation is that the real work is still ahead of us.
I wrote my last text on retention. And a lot of you got back to me saying- “It all makes sense in “normal” times but if you didn’t notice, 2020 was somewhat different”
I still believe that retention is the king of growth (or survival). What did change- specially for businesses negatively affected by the pandemic- are the underlining and surrounding factors.
A lot of you asked me to write on how to adjust your retention strategy if 2020 was an unexpected knock-down hit for you.
Lest start with what stays the same
1. Focus on usage, not revenue!
Revenue is a derivative of usage. Most probably your decrease in revenue is a consequence of drop in usage. Track and optimize for the usage, not for $. If you have strong usage base, money will come.
2. Break down retention into its core inputs!
It’s difficult to have actionable ideas to improve retention. What you can do, is to work on your retention at every stage of your customer lifecycle
· Get- How to attract new customers?
· Engage- how to make your existing customers use your product or service more?
· Keep- how to win back those being inactive for a period of time or considering to quit?
To think about your retention recovery plan, try to ask yourself this question:
How have the habits of your customers changed? How might they change in the future?
I mean motivations to sign-up, use, cancel. To understand it better, break it down by your customer segments/ buying personas etc. Remember that it will probably be rather dynamic picture, so you should update your answer at least every 2–4 weeks, depending on you business.
Looking at the retention numbers (sign-ups, usage, cancellations) try to understand reasons for changes. Ask yourself: why? why? why? why? Monitoring quantitative measures is not enough, you must understand underlying motivations!
This should allow you to understand which input you should focus on to improve your retention. Don’t think that your customers will magically re-appear. Even if they do, it’ll take time and reinforcement to establish.
How to resurrect your users? Who to resurrect?
Check your own data. My hint is that most of you, severely affected by the pandemic, suffer from the fact your current customers decrease in usage. To re-activate existing users is usually more difficult than initial activation of new cohords. I don’t want to discourage anyone, but I’d expect that you can re-activate only a fraction of your pre-COVID customers. To be efficient, you should prioritize most promising customer segments. Your first, intuitive choice might be your pre-COVID “heavy users” or key accounts. But it can be misleading.
I’ll give you example form a accommodation booking marketplace (for confidentiality, let’s say it’s sth like hotels.com, booking.com, but it’s neither of those two). Looking at historical data they had two important segments on the demand-side: business travelers and international family holidays. Both of those segments are rather unlikely to be first to come back. It seems to make more sense to focus on local travelers in the first resurrection step
On the supply-side they had a significant segment of large, +50 bed accommodation providers (hotels). Who’s likely to open first and get bookings- large hotel or small family-owned 3 room guesthouse? I’d bet the latter.
Some customers will never return
Take my own case. I had a gym membership and would train 3x/week. But last spring I got myself elliptical trainer, treadmill, and set of weights. All I need I have at home now and I don’t plan to go to the gym any time soon. I have a strong alternative to my gym membership.
On the other hand consider my friend who’s a member at the same gym. His COVID alternative is watching exercise videos on YouTube 3x week. He hates it but doesn’t have any better option. He can’t wait for the gym to re-open. His alternative is weak. For the gym, my friend should be a resurrection priority, not me.
Think ahead- Imagining the unimaginable, perform a “pre-mortem”
I’m honored to know Stanford Professor Baba Shiv for some years. He’s a world’s leading expert in neuroeconomics. Prof. Shiv advises companies to perform “pre-mortems” (aka prospective hindsight). We’re great at retrospective rationalizing, analyzing what went right or wrong after the fact. We always seem to know what the right tactic would have been once the game is over. Obviously it’s much harder to make the right choices beforehand. Hindsight is always 20/20.
I know a lot of companies that greatly benefited over the years from Prof. Shiv pre-mortem approach. A pre-mortem of a healthy company in normal times can provide a number of key insights. You try to identify those factors that might cause the downfall of your current business model. Than assess which factors represent a genuine risk and determine which offer the greatest opportunities. Once you’ve identified the possible causes of death, you can start to anticipate.
I strongly believe “pre-mortem” is even more relevant these days! Your ability to identify possible issues and also to come up with clear solutions is dramatically improved when you aren’t already in a stressful situation. Humans are biased substantially to optimism — you need to explicitly give them permission to imagine the scenario that everything goes wrong.
What are the extreme scenarios that could happen?
What signals would tell us that this scenario is unfolding?
What is the impact on the business?
What would we do to mitigate?
It’s better if the team making decisions when the stakes aren’t high, so that if one of the scenarios happens we already have a flow chart of decisions spelled out.
I don’t believe in silver-bullets. But maybe some of the ideas below you’ll find useful.
1. Connect your brand initiatives with customers
Humans like products they feel invested in and can trust. Generate that trust for your customers. Use social media to connect with your customer about the vision behind your company, any interesting facts about products, the kind of leadership appeal, smart goals, and resilience during COVID-19. This will keep them invested and build trust when they see the groundwork behind the company.
2. Concise communication
It is very important to put the right and best foot forward. Instead of bombarding your customers with generic emails, go for something interesting that will add value to their overall life. Tell them the unique features of how your company can aid them at this time. Providing value is a great way to not only remind that you are there, but it’s also important to keep goodwill in their minds about their association with you.
3. Add-ons to products and services
See how well you can stand out amongst competitors by tweaking your product to address current needs or concerns. Relevant additions that address immediate concerns can be a great help to all and will even bring in more customers.
4. Social media for the win.
Social media plays an integral role today and its best to use it in a rich manner of advantage. Even right now most of your customers are scrolling through Instagram, Facebook, and Twitter and consuming digital content. Make your mark there with engaging content that is interactive. Respond to customer queries, answer their comments, and show your presence.
It’s an open secret that incentivizing your customers is important to keep them invested in your product or service. Measures such as gift cards, discounts, free trials, and more can help them stick. Reduce customer churn through personalization and offer rewards for promotion. Implement customer loyalty programs that will aim at client retention and brand loyalty.
6. Create helpful content
Publishing online content can bring you to the top of your customers’ minds, but the key here is to create content that is helpful. Offer webinars, podcasts and online tutorials to teach your customers something that solves their current needs. Consider hosting online events or live video streams to connect with your community and keep them engaged. This content can be informational as well as entertaining.
7. Add a personal touch
Remember that the coronavirus crisis has personally impacted your customers on multiple levels. As you speak to your customers, create messaging that is personal and compassionate. Business owners can deliver personal touches through handwritten cards, customized emails and check-in phone calls to see how their customers are doing.
Mike Tyson was right: Everybody does have a plan until they get punched in the mouth
The real key to success is to have the right kind of plan to be able to move forward after they get hit. For those running any size business or organization, from the CEO of the largest organization to an entrepreneur heading his or her own startup to the mayor of a small town, you will always be wise to plan for bumps in the road- and more- along the way as you execute that beautiful, flawless plan. That’s reality, and reality is more competitive and complicated each and every day.
This text was inspired by my recent experience with numerous companies, as well as all the amazing content on retention and growth from reforge.com. If you want to explore more, I strongly recommend to check Reforge Retention + Engagement program.
Thanks for reading. Happy to hear your thoughts. You can reach me at https://www.linkedin.com/in/maciejkraus/