One of the single most important app metrics today is retention. With over 1.2 million apps in the App Store, keeping users is extremely difficult.
Retention is directly tied to the success or failure of your startup/app and a measure of that success is in building a sustainable business model whereby you acquire customers for less than the revenue they generate. In other words, you're not a business until your customer acquisition costs (CAC) are lower than the lifetime value of the customer (LTV).
Most startups think getting customers is the key to success. As a result, they spend most of their marketing money on generating downloads. But what happens if you put all of your proverbial eggs in the basket of generating users and find out that customers simply aren't using your app?
Here are several ways to avoid this scenario--and to boost your retention rate and LTV:
1. Nail the onboarding process
Over 80 percent of downloaded apps are deleted after being used once! Take a moment to think about this. In other words, over 80 percent of the budget you set toward generating downloads is being almost completely wasted. A good onboarding process can significantly reduce this figure.
Onboarding is about getting a new user to the "aha" moment as fast as possible. The aha moment is the first time a user finally gets the product and becomes seriously engaged.
For example: In the early days, Twitter struggled with retaining users. Most simply abandoned the app. After some analysis, Twitter's team uncovered that users were most likely to continuously use the app if they were allowed to follow at least ten people. As a result, the Twitter team changed their signup process so that users started by following at least ten other users.
By the same token, Dropbox realized their users were most likely to adopt the product if they put at least one file in their Dropbox folder. Once this was realized, the growth team created a gamified onboarding process, which incentivized the new user signup route by giving extra storage space in return for putting one file in the Dropbox folder.
Good onboarding involves a mix of selling, educating, and using your product. The first step is identifying your aha moment and removing any obstacles to it that can be found in the oboarding process.
2. Remember that successful products become habits
The best products are not products--they are part of our routine. We don't think of toothpaste, credit cards or email as products. Instead, they're just parts of our lives--used almost subconsciously.
Our brains develop these routines to save energy. You simply go on autopilot so that your brain can lower its activity and save energy for later. All habits are formed out of 3 elements: trigger, routine and reward, and their formation happens by repetition.
- Trigger: Trigger is what puts performing your routine on autopilot mode. There are internal and external triggers. For credit cards an internal trigger is the moment requiring cash, and for something like Facebook it might be a feeling of loneliness; for YouTube it might be boredom. On the flipside an external trigger for Facebook would be something in the control of the startup - a notification reminding you that something is happening, an online ad, email newsletter, etc. To bring users to your app you need to ensure your external triggers reach users at the same time as the internal triggers.
- Reward: Reward is what stimulates your brain in a positive way so that next time it's motivated to perform the action again. For Facebook it's the social aspect, for Youtube it's entertainment, and for some apps it's simply badges and game elements that make you feel good. You need to provide your users with a reward in order to develop a motivation to come back.
- Repetition: Lastly, habits are built by repetition. Nir Eyal, who is a pioneer in analyzing habit forming products pointed out that top apps contain an element of "investment" that prevents users from abandoning it. For Instagram it's your photo album, for Facebook it's your network, for Spotify it's the playlists you've spent time building. It's hard to abandon something you've invested your time in.
3. Work on your customer service
A recent study by Accenture found that nearly 70 percent of defecting customers would have stayed if their problem had been resolved with faster customer service. Good customer service should be considered one of the building blocks of any successful business. Here are some quick tips:
- Respond quickly: You don't need an immediate solution to a customer’s problem, the mere fact that you quickly show you're working on it makes a huge difference.
- Treat them like friends: People respond better when they feel they're dealing with another human being. Be personal and imagine you’re speaking with your friend.
- Create a good FAQ and knowledge base: Often times a good FAQ will supply the answer to a simple problem that could evolve to something bigger, you can prevent this by approaching your product or service as though you’ve never heard of it. Or better yet, ask friends unfamiliar with it to throw as many questions at you as possible and capture all of them in writing, than provide a simple answer to each one.
- Surprise them: Look for opportunities, to surprise customers with a follow-up, freebie or some sort of unexpected delight.
- Get feedback: Reach out to your best customers, conduct user tests, and create follow-up emails that ask for candid responses.
These are the three keys to building engaging products and increasing user retention. Higher retention rates lead to higher LTV--and that's what you ultimately need to achieve to become a sustainable business.