The Product Person #11 - How To Retain Users

Retaining a user is like maintaining a healthy relationship.

Retaining a user is like keeping a girlfriend happy.

You know they already like you. You spend time listening to their issues and you talk through them together. You surprise them with gifts. And you make sure to show that you appreciate them and are working hard to make them happy. 

Acquiring a user is like being on the dating scene.

You’re competing with every other person that wants their attention. You have to adapt to new personalities. You have to attend social events to up your chances of meeting someone. All while monitoring how you look and act so that you don’t come off as desperate or too forward.

When I’m out on the pursuit, I like to ask myself “What Would Idris (Elba) Do?” (WWID).

Fostering those healthy relationships comes with its perks: a 5% increase in customer retention leads to a 25%-95% increase in profits, according to Harvard Business School.

And if you want to try to get lucky (cue Daft Punk), you have better chances with your already committed partner versus a rando from the bar: The chance of selling to an existing customer is 60%-70%, whereas a new prospect only buys 5%-20% of the time, according to Marketing Metrics.

Analogies aside. When thinking about growth, retention always.

Here are some tactics on how to prevent churn and retain users.

Anti-churn tactics

To reactivate a user that recently quit

Send them an offer they can’t refuse, like a deep discount or a free month of membership. But if they do refuse, you’ll likely get an enlightening complaint about your product or an insight on their particular use-case.

Don’t overdo it though. You don’t want to become that annoying brand that frequently invades their inbox. An occasional “U up?” text is more than enough. Leave a bad impression and they’ll tell all their friends about your desperate attempts of getting them back.

According to Zendesk, 95% of customers that have bad experiences with customer service share those experiences with others. And over half of them share the news with more than 5 other people.

Recovering a failed payment

Use a payment provider like Stripe because they automatically update credit cards whenever your user’s card expires. 

In the case where you have to chase users for failed payments, use a dunning solution like Baremetrics Recover.

You can also provide your customers with guides on how to contact their bank to unblock their cards. 

Send a reminder

Remind your user of the value they’re receiving from your product. For example, Slack sends weekly stats on how they impact the workflow of you and your team. 

Engage and educate

Talk to your customers often and educate them. Sending a weekly newsletter with industry news and tips on how to use your product will keep you on their minds. Do this well and you’ll elevate from just another useful product to a trusted source of information. 

In fact, according to RightNow, 55% of customers say that easy access to support and information can make them fall in love with a brand.

Encourage annual plans

To decrease the chance of churn, you can also encourage uses to purchase on annual plan. The psychological effects of this is that it fosters commitment and makes your user want to extract value from your product as soon as possible. 

According to this study on human decision-making, people are more likely to dedicate extra effort and time into something that they’ve paid for in advance. And they’re more likely to have positive emotions towards that thing, in order to justify the sunk cost.

💰 Pricing pro tip: Price your yearly plans at sustainable levels and tack on a premium for your monthly plan. For example: $15/mo but $99/year.

Invite them into the process

You can invite your customers into your product decision-making by having a public roadmap. You can also use a customer feedback tool like Canny.io to suggest features and have users votes for the best ones.

Optimize your onboarding

Discover the metric that causes your users to stick around for longer and then optimize your onboarding around that experience.

For example, a productivity tool like Notion can become useless fast if you have nothing to put in there. So they’re onboarding process would most likely be about getting you to fill Notion with important notes, thoughts, or documents to fill a sense of commitment to using them.

Give thanks

And don’t forget to thank your customers! If you’re very early stage, it may be beneficial to personally send an email to every customer. And if you’re able to, doing something as unusual as sending a physical letter could turn your customers into true fans of your brand —which is the ultimate goal.

To quantify the benefits of having loyal customers: According to Temkin Group, they’re 5x more likely to re-purchase, 5x more likely to tell their friends, and 7x more likely to try new products that you release.

Examples of “good churn” that you shouldn’t worry about:

  • If you’re a B2B product and your customer closed up shop or goes out of business.

  • If you empowered your customer and got them a new job where they don’t need your product anymore.

  • If your customer has to pause their account because they’re a student on summer vacation, a pregnant mother, or they just want to take a break from your product for a bit.

  • If your customer signs up for the free trial and then realizes they don’t actually need your product.

  • If your customer frequently complains and requests features that are outside of your product’s scope.

Some extra goodies

A lot of these tips, I found in this awesome post by a bootstrapped founder named Arvid Kahl. Say hi to him for me.

I also found a useful article packed with 60+ stats on user retention. Data-driven folks should enjoy that.

Also, hat tip to Ryan Kulp for his insightful comment on retention vs acquisition in a Growth Hackers forum.


❤️ Thanks for reading Issue #11. I’d really appreciate if you hit that heart buttonshare this with someone you know that’ll find it useful.

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Enjoy the rest of your week :)

- Anthony