Split testing is at the core of any great conversion rate optimization strategy.
If you know the right tests to run, it can also help you reduce your churn rate.
Here is how one company did just that.
Like many other SaaS companies,BrightInfo was plagued with a churn rate. That means some customers would leave the service after a while, taking their money with them.
At 2.3%, BrightInfo's churn rate was hardly an abomination. Still, company executives wanted to reduce it.
And they did just that. They brought it all the way down to just .5% - a drop of 78%.
How did the company manage to retain more customers? BrightInfo showed its users the proof that was in the pudding.
That proof was the result ofsplit-testing.
Discovering the Problem
BrightInfo began its task of reducing churn the right way. That is, the company made no assumptions about the problem and instead put its marketing team to work to find out why customers were bailing.
There was some good news and some bad news in the results. The good news was that customers would often drop when presented with the opportunity to renew their contract for one year. In other words, they weren't actively leaving the service, they just decided that they didn't want to stay with it for another 12 months.
Why? Well, that's the bad news. Customers didn't see the company as providing enough value. They thought they were wasting their money.
Even more distressing to the folks at BrightInfo was that there seemed to be a direct correlation between time and value perceived. In other words, the longer that customers stuck with the service, the less they believed it was contributing to their bottom line.
This can happen sometimes even with valuable business. Often, customers get so comfortable they forget the need being filled.
The company's Customer Success team heard complaints like: "How can we still know that you give us value?" and "At first we saw the impact of your product, but now we're not so sure any more."
So Mission Possible for BrightInfo was to demonstrate that the service does, in fact, provide a positive return on investment to its users and that the value lasts with time.
The BrightInfo Service
BrightInfo runs code on customer websites that's designed to increase engagement and improve the site's overall conversion rate. It's essentially an AI algorithm that uses textual and semantic analysis to determine site content and then, in real time, analyzes visitor behavior to determine optimal content delivery at specific places in the site structure.
The problem BrightInfo faced is that its customers were also engaged in other practices to optimize conversions. So when BrightInfo advocates tried to make the case that their service was adding value, the response they got was something like: "Yeah? Well how do we know that your code is doing that and not all the other things we're doing to improve our conversion rate?"
It was a fair question, really.
BrightInfo Needed a "Grocery Store Solution"
BrightInfo needed to make its case to customers with a "grocery store solution."
A grocery store solution is a constant reminder that your service is contributing value to your customers.
You've probably visited a grocery store on more than one occasion where the policy is that the cashier is to remind you how much you saved on your way out the door. Once you've completed your checkout, the friendly guy or gal rips your receipt off the register, looks at it, and then says something like "You saved $14.73 by shopping with us today!"
It's good marketing.
They needed to take a page from the playbook of some big grocery chains.
The big question for them at this point was: "How?"
As in: "How can we prove to our customers that they're getting a positive return on investment because they signed on with us?"
One possibility that the team floated around was to remind customers about their (lower) conversion rate prior to installing the BrightInfo code.
That was rejected for a couple of reasons. First, BrightInfo isn't a reminder app. Second, it didn't take into account other conversion rate optimization (CRO) efforts.
So now the company was at the Edisonesque point of knowing how not to do it, but still needed a way to demonstrate value.
That's when BrightInfo leaders settled on an old favorite: split-testing.
The Split-Testing Solution
The split-testing solution was easier said than done.
Sure, BrightInfo engineers could easily insert split-testing code into their existing algorithm and then show customers that people who visited the site without the code converted at a lower rate than people who visited the site with the code.
The problem was that the company would turn its customers into guinea pigs. Also, split-testing is usually performed on a 50-50 basis. In this case, that meant half of visitors would traverse a customer site with the BrightInfo algorithm and the other half without the algorithm.
In other words, a 50-50 solution would mean that they would force their customers to lose business just to prove that the algorithm was increasing conversions. That was a non-starter.
Instead,BrightInfo engineers set up the split-testing code so that it only ran on a small percentage of visits (between .5% and 1.5%, depending on overall traffic). That way, the company could demonstrate value by showing lower conversions on those few visitors without adversely impacting the bottom line of their customers. Everybody wins.
The Final Result
Armed with that information, BrightInfo was able to demonstrate to its customers exactly how much value it was contributing to their CRO efforts. As it turns out, it was enough to reduce churn significantly.
The challenge for this company will be to get this information in front of their client's moving forward.
As a digital marketing agency owner, I can related with BrightInfo. On occasion, we have had very successful clients forget the value of the service.
That is why every three months we show our results and set the next 3 month strategy in person. This shows where we have been, where we are going and our value.
Takeaway lesson: You must toot your own horn, even to your current customers. It is an important part of business and reducing churn.
When you do, make sure to offer proof. Also, make sure to analyze your own business to determine the key times when it will have the most impact.