Customer retention is the whole ball game.
In today’s frantic environment, it’s hard to know what a start-up should try to hang on to and make its own. For new mobile applications, the rate of abandonment is ten times faster than the rate of adoption across almost every age cohort. In the world of six-to-15-second videos, Andy Warhol’s 15 minutes of fame seems like an eternity and a tired remnant from another time.
In building value for your business, sustainable customer retention is the whole ball game. Increasing retention isn’t easy, but it’s a lot easier to achieve when you understand the relevant drivers of behavior and then build your own program to support them.
The best players in this area are masters of what I call “manufactured addiction.” It’s the art of making sure that your users will love you even more tomorrow than they did yesterday. All it takes to succeed is a basic understanding of human nature and a plan that capitalizes on some of our most basic emotions.
Here’s a short list of the fundamental ideas and emotional drivers that your engagement and retention plan should incorporate:
1. We are basically lazy
We’d rather have simple, boring, or repetitive things done for us than do them ourselves. We’ll happily exchange our loyalty for improvements in our productivity, savings of time and effort, or other benefits. Everything today is a deal--we engage in constant calculations of the personal value of various proposed transactions. Often, we make these repeated determinations automatically and almost unconsciously.
2. We hate to waste our time. We especially hate redundancy
How many times have you been asked to supply the same information repeatedly? Other than making healthy people physically ill, the worst injury that hospitals have heaped upon the human race is making us complete ridiculously redundant documents.
This is why socially-engineered tools such as the omnipresent Facebook Connect button are hugely powerful connectors and retention devices. They avoid the constant need for new site users to re-supply the same data over and over, and save programming costs for the owners of more than 10 million independent sites.
3. We don’t know when to quit
Once we have mentally invested our time and energy into any activity, we are much less likely to abandon it. We seem to always believe that our switching costs are much higher and more onerous than they actually are. As a result, we are virtually incapable of bestirring ourselves and choosing any less-than-overwhelmingly-compelling alternative to almost anything. Even the most useless, trivial and fleeting rewards (ranks, powers, badges, scores, etc.) make leaving that much harder.
4. We don’t want to disappoint our friends
We often underestimate the power of peer and other social pressures, even among grown-ups. The more “connected” we believe we are, the longer we will remain--even when the activity has ceased to hold any personal interest or provide any real value. It’s the contagious power of the crowd. There is a palpable sense that in “leaving” even the most useless environment, website or other fruitless activity we are abandoning our “friends” and depriving them in some sense of the benefit of our continued presence.
5. We do much more from habit than from rational, conscious choice
The repeated use of any product or service tends to become a habit, and habits are hard to break. When habits are reinforced by peer pressure, collective action and other group dynamics, they become even more difficult to dislodge. We don’t appreciate how sneaky and powerful habits can be because they begin as weak tendencies, which we think of as intentional preferences. Their power isn’t readily apparent until we discover how hard they are to break. Make your product or service easy to use, readily accessible, and friction-free, and you’ll own me.
6. We want to be leaders, not losers, and everyone keeps score
This is why cab drivers can quote you the precise opening night movie box office grosses for their favorite films. We’re competitive, and sometimes it’s more important to us that our friends lose than that we win. It’s a little like the two guys running away from a hungry bear. You don’t have to beat the bear--you just have to outrun the other guy.
While leader boards have a certain appeal, peer-to-peer comparisons are far more compelling because you always want to know where you stand relative to your friends. Only things that are relevant to us as individuals will compel or change our behavior. While financial considerations will max out, there’s no clear limit on the power of meaningful status-flavored achievements and rankings to drive increased and extended performance in business and social contexts.
7. We live in a “what have you done for me lately?” world
Just like Walmart and Costco religiously change their in-store displays every week, any site that doesn’t feed the new, fresh content beast is doomed. Return visitors come with a set of progressively higher expectations. They want to be offered new and extraordinary experiences on each visit.
There are two solutions. One is to hire more people and constantly obsess about the need to create clever new content. This is almost as bad as doing nothing and much more expensive.
The second, smarter, way to go, is to free-ride on obvious and available content that is being generated regularly and consistently by other providers. I’m not talking about stealing. I’m talking about sitting down with a national events calendar and building a full year of piggy-backing your content off of the constant and recurring flow of events, activities, anniversaries, holidays, films, etc. that beat a path to your door all year long.
This seems so obvious that you would think it would form the foundation of virtually every site’s programming. Yet almost no one (except Google, which does a new header every day) takes the few hours of creative thinking and organization to ensure a stream of content ideas that the entire rest of the entertainment, news and media world are engaged in promoting for them. How much easier and cheaper could it be?
8. We all want to drive the train
Many young and active social media users want to have as much impact and control as possible to make up for the frustration, helplessness and impotence they often feel at work. This sets up an interesting problem for many websites. If everything is too easy to accomplish, the users lose interest. They want an active role in the process.
I suppose there are some people who would accept a fundamentally passive experience, but they aren’t the users you looking for. We want the people who make things happen, not the ones who watch what happened, or worse yet, the ones who wonder what happened. When your users are part of figuring something out and accomplishing even interim goals, they’re going to be much more committed to the enterprise and to its success. The best and most compelling sites convert initial involvement into active engagement and then engagement into return and retention--all as a part of one seamless process.
Equally importantly, the most enticing sites are fast. Every time we visit a site, we’re expecting and hoping to learn something. The key to effective learning is the immediacy and accuracy of the feedback. We’re not checking the calendar here--the cycle time for everything these days is in minutes, not months. Everything is in the moment. If you want me to come back, you’ve got to deliver the goods every time I visit.
HOWARD A. TULLMAN is the CEO of 1871 – Where Digital Startups Get Their Start and the General Managing Partner of G2T3V, LLC and of Chicago High Tech Investment Partners. He is a member of the Chicago NEXT & Cultural Affairs Councils and the Illinois Innovation & Arts Councils; an adjunct professor at Kellogg; and an advisor to many start-ups. He is the former Chairman and CEO of Tribeca Flashpoint Media Arts Academy. Over the last 45 years, he has successfully founded more than a dozen high-tech companies. @tullman