A 3-Step Framework for Improving Customer Retention
The value of strong customer retention is well known: keeping customers is 6-7 times more cost-effective than acquiring new ones.
But the problem is: what should you actually do about it?
In this article we'll learn how focusing on the phrase "customer retention" stops us from seeing the bigger picture, and discover a better framework for fixing your retention blues.
So let's talk about the elephant in the room.
Why you shouldn’t focus on the word "retention"
I’m not going to tell you you shouldn’t be trying to retain customers.
Of course you should. But here’s the thing.
Leaving it too late, and trying to 'salvage' an unhappy or inactive customer is problematic.
Sure, dunning campaigns and cancellation surveys can have marginal success - somewhere in the 5% range for each. But more often than not, if you’re actively trying to keep a customer from leaving, you are probably too late.
You might keep them around for a few months longer, but unless your product undergoes some miracle transformation, they’ll be gone soon enough.
So what should you do?
Let’s flip the lens and talk about another approach to customer retention.
Why better customer retention starts with better activation
Let’s look at some data around onboarding activation and customer retention.
Here’s a doozy:
86% of people say they’d be more likely to stay loyal to a business that invests in welcoming, educational onboarding content.
That’s huge: 86%!
But wait, it gets better:
More than half (55%) of people say they’ve returned a product because they didn’t fully understand how to use it.
These are business changing numbers, when you think about their impact on customer loyalty and retention.
So what’s the lesson here?
It’s that taking care of your customer’s onboarding experience is by far your simplest route to improving retention rates. Just like prevention is always better than cure.
So how do we actually do that? How do we prevent customers from leaving through better onboarding?
Where to focus your retention efforts instead (the 3 key activation hotspots)
So how do you get customers to stick around longer?
I’m going to show you the 3 perfect onboarding activation ‘hotspots’ to improve your retention rates, then share 3 specific tactics and tools you can use to elevate these critical moments.
Let’s zoom out and find hotspot #1.
Retention Hotspot #1: Hours 1-4 after signing up or subscribing
These early hours are so critical to not only activation, but retention.
If you can make a stellar first impression with your new leads, you have a chance to create a new customer for life.
And if you think this can be done with a simple onboarding email, and some cleverly timed in-app messages, you are sorely mistaken.
Skip to the next section to learn how to nail this retention critical moment.
Retention Hotspot #2: Primary feature adoption - your customer’s “aha!” moment
Once your customer is in the door and using your product, your best chance of keeping them long-term is to ensure they see value.
And you need to define that value very clearly from the start.
Fail to define what step your customer needs to take to see value, and you’ll fail to keep them around for very long.
The best way of doing this is to use your email marketing tools, and your email onboarding to drive their adoption of any features related to experiencing that “aha!” moment.
It might sound complicated. But strip things back, and it’s actually pretty easy.
Skip to the next section to see an example, and learn how you can do this too.
Retention Hotspot #3: Right after paying for your product
Woohoo, they paid!
But hold on a minute. Your job is definitely not done.
These early days are the riskiest time when it comes to retention.
Right after paying is where you need to make sure your new customer feels super-valued and supported, so that he engages with you and your support channels for the long road ahead.
You want to keep him for years not months, and you can’t do it without first developing the foundation for long-term engagement.
So there we have it.
There’s your simple map to the retention promised land.
Let me show you three tools that can help you nail these big moments, and deliver a churn-busting customer experience.
3 must-know tools you should be using to boost your retention rates
There are 3 tools every churn-busting team must master.
Use them wisely, and they will be your greatest assets in your retention journey.
Tool #1: Bonjoro - personal onboarding videos
How would you feel if you signed up for a new product and got a personal welcome video from the founder or team?
Not some tacky pre-recorded thing. No, the real deal.
A video just for you, welcoming you aboard, and explaining how to get the best from that product.
That’s what Bonjoro is all about. Bonjoro lets you send personal videos to your new customers in a truly unique way.
You connect it with your CRM to get notified when you get a new lead or signup, so you can send them a quick, personal welcome video.
It can even pull through custom fields from your CRM, so you can personalize each video. How cool is that?
Here’s what this looks like for your customer. This is a video sent by Design Pickle to one of their new customers - talk about setting the tone for a long-term customer relationship!
Use this tool wisely and you’ll see results just like this:
OK, come and look at tool #2.
Tool #2: Your CRM - “aha!” moment email automations
Your customers must know exactly how to get the most value from your product.
This is where your CRM comes in.
You need to create laser focused email automations to guide them to the quickest time to value (TTV) with your product, the “aha!” moment.
The key here is to focus around one or two core actions you need your customers to take to hit that aha! Moment.
Take a look at this email from Salesmsg - it gives the customer a very clear signpost of what to do first, there is no grey area here, or multiple, conflicting CTAs.
Let’s look at our product, Bonjoro, as another example.
We know that getting a reply to one of their videos is the “aha!” moment for our users.
To make sure they get a reply we focus on two things:
- Making sure they have people to send videos to inside their account.
- Making sure they have a quick way to send those videos easily.
The first one is achieved by connecting their CRM to Bonjoro. Once they’ve hooked it up, they will get notified to send videos to their new sign ups, subscribers, or buyers. Whichever trigger event they pick.
So our initial onboarding process and emails are built around this. We do everything we can to get them to connect their CRM to Bonjoro.
But having lots of videos to send is actually bad, if they need to spend all day sending them.
That’s why the second piece we focus on is getting them to set up a video message template.
Once they’ve created a template, all they need to do is hit record and send. That’s it. No typing, no faffing around with anything. Get notified, record for 30 seconds, send, and done.
So take a look at your own onboarding flows. Is there anything you can cut out? Are you dialing in hard enough on that “aha!” moment?
Your CRM is a powerful tool for customer activation and retention. You just need to use it wisely.
OK, we’re almost done. Let’s go and look at our final tool.
Tool #3: Handwrytten - new customer thank-you notes
Getting a new lead to pay isn’t the end of the activation journey.
Sure your customer might be going along nicely with your product and decide to put their card in and pay, but leaving them to their own devices now is a super high risk strategy.
Remember the stat from earlier? More than half (55%) of people say they’ve returned a product because they didn’t fully understand how to use it.
You need to ensure at all costs that your new customer is engaging. Engaging with you, engaging with your team, engaging with your support channels if they hit any roadblocks.
And just like with hours 1-4, this is a point where doing something unique and surprising can work wonders.
Imagine all the other new products or services your customer might have bought recently.
Now, how are you going to stand out from the pack at this critical moment? Get your customer coming back again and again after making that commitment to your product.
How are you going to be the one they engage with and tell everyone else about?
Here’s an idea for you.
Try sending a handwritten note to them right after they pay. Just a few words will work.
Here’s a script you could try:
Yes, this might feel old fashioned for the modern age, but me and the team at [insert your brand] wanted to just check-in and say thanks again for trialing our product.
Here’s the thing. We genuinely care about you and all of our customers. You make us tick, and help us exist.
So we want to give back. With our time. And by making sure your business can be the very best it can be.
In short, we want you to succeed!
So, if you need anything at all to get the best from [insert your product], please reach out to me on [insert email] or [insert phone].
[Your name] and the team at [insert your company]
P.S. [Insert a cheeky little offer or extra value proposition here]"
Try sending just 50 of these notes, and see what happens.
Trust me, your customer will never have seen anything like it.
One more thing; your customer retention mantra
Fixing your customer retention issues isn't just about having the right tactics and tools.
It's also about mindset across your team.
Here at Bonjoro, we have an internal ethos, that guides our approach to customers. It's this:
“Automate business processes. But never automate customer relationships.”
We believe that great customer experience (and retention) starts with using automation to enable more human connections, not less.
That's why we created Bonjoro, and why we still send a personal onboarding video to every signup we get.
If you want to see how personal video can boost your own retention rates, start by sending your first 50 welcome videos free with Bonjoro.