How excellent user research can improve retention + 2 Case Studies.
Across all verticals, trends have proven that no SaaS product can survive, if it does not retain its customers.
Customer retention remains a prevalent topic from the smallest to the largest product teams. Heck most early stage companies these days, hire experts to manage customer churn and retention using different methods.
At its core, a products’ customer retention rates reflect its capacity to consistently deliver value in its operating market. It is mostly the art of ensuring that customers continuously use your product in terms of purchases, engagement or user sessions. Sometimes, a combination of the three.
To get customer retention right, I recommend you imagine your process in cohorts as it helps you isolate issues correctly, to treat each one differently.
There are three major retention stages that mimic a user’s lifetime cycle -
Early-stage retention: Your goal here is re-engagement metrics. You want to focus on excellent onboarding, blazing fast value identification, bugs management and network effects.
Growth-stage retention: Here, your top-line goal is to own and steer consumer habits. Identify user patterns and continue to double down on them. During this stage, you should focus on establishing a pattern of repeated product use. You can expect to run a ton of A/B tests at this stage as well.
Mature-stage retention: Your customers should be sharing your product in their influence groups by now. You need to double down on establishing a strong feedback mechanism, a positive core loop and continual product improvements.
User Retention, Churn and User Research - The Intersection.
Churn is simply what happens when a product cannot retain its users over a given time period. Churn is measured differently from vertical to vertical but a great way to evaluate churn is in cohorts.
Now a closer look at churn and why user research is the finest antidote.
For SaaS products, success rests heavily on customer loyalty and this is due to the ubiquitous nature of similar vertical products in the market. If you have paid recent attention to the trends in SaaS, many over-hyped products quickly lose their novelty, which reinforces the fact that customer loyalty is fickle.
Having worked on several successful and failed SaaS products, I have discovered one of the smartest ways to avoid this vicious cycle – gathering user feedback to optimize user experience.
PS - reducing churn is a process that must be painstakingly built with the right goals, tools and talent.
Here are 3 practical tips I have shared with many founders on how user experience can improve their retention rates :
1. Know your customers best.
A crucial component of any retention strategy is collecting user feedback.
From my experience and industry trends, getting feedback directly from customers will give you a view of customers’ frustrations with the way your product is currently built.
Having run thousands of experiments , I will give you a few scenarios in which you can gather feedback -
If you are looking to gauge users' behavior of an onboarding journey versus a single splash page with tips, you want to gather qualitative feedback by running unmoderated tests of a prototype with your target audience.
If you want to understand the preferences of your user population around a few specific areas, quantitative data from a survey might suffice.
Your high level goal is for your team to have a better understanding of how your audience navigates your product.
You’ll gain clarity on how users carry out these actions, the goals they are looking to achieve and ultimately, how and where in the process you can innovate for them.
2. Tighten your products’ reward system
Across many B2B and B2C products, I have found that the way you build your reward cadence and position this sequence in your customers' brain, keeps them coming back for more. One trade off is “addiction”, however there are definitely practical ways to boost intrinsic triggers.
At its core and based on feedback from your customers, important tools for building a strong reward system are Colors, Badges, Sticky illustrations, Audio cues, Animation and Visual feedback.
Running these tactics through a moderated user interview will reveal how your customers will use and return to experience variable rewards.
3. Motivate action [ Internal Triggers ]
Regardless of what vertical you are building in, I have found that there are certain actions correlated with retention that you want customers to take.
It could be adding more funds to a wallet or engaging with certain product features within a certain space of time.
The key is to operate with a strong grasp of the user journey. Every-time you speak with your customers, you discover what their internal triggers are and you can build that into a contextualized call to action which could be – cross-sell / upsell attempt, exclusive content, beta-access, User Generated Content, etc.
Building meaningful and personalized engagement for users will spike brand perception and certainly uplift retention rates.
PS - I have seen many PMs erroneously think new features answer to retention rates. Wrong. If you want to see a reduction in churn rates, you have to address usability in the context of the experience as a whole.
What user research techniques should you use to Reduce Customer Churn?
There are tons of methods out there. However, I will share 4 methods that worked perfectly on several teams I have led.
Live moderated and unmoderated interviews,
Customer Surveys,
Focus groups.
My favorite is the live moderated interviews. Product Managers often use them in early stage products. Mostly because you get to view how people interact with your site and navigate specific prompts.
You can use a tool like Spire to conduct user testing for your product. They have wonderful onboarding and instructions for setting up your first user test, but the concept really is simple.
My Tips for User Interviews -
Use primarily open-ended questions.
Look for fears, motivations, and comparison shopping behavior.
Limit the survey to <10 questions.
Collect responses immediately after a significant experience. If you wait too long, people forget what their experience was like and will make things up.
If you run surveys, combine your customer survey data with behavioral data from live interviews. What people say isn’t always what they actually do.
Overall, in my churn optimization experience, customer surveys are often one of the most insightful areas when it comes to finding frustrations with messaging or confusion about product benefits.
By addressing concerns with micro-copy or better onboarding, you can eliminate this confusion up front and bring users to an incrementally better experience. This usually translates to lower customer churn and better customer happiness.
PS - Whatever methods you use, always activate session replays as part of your execution and evaluation plan.
CASE STUDY 1
As much as churn happens on all teams, the good news is that it is largely avoidable and I have personally led teams where we spent millions of $$ to avoid churn.
Having managed products that housed 10s of million subscribers, my assertion is that Churn happens when customers stop deriving value from a product and abandon the relationship.
When churn happens [ on a large scale], some PMs attempt to pivot entire business models, ship incremental changes or even reinvent the product’s offerings.
I have successfully & unsuccessfully tried many ways to reduce/stop churn but one of the best ways I have discovered and replicated success in, is executing User Research to optimize our product’s design and functionality to match user priorities.
There were a lot of lessons, and here are some of the critical lessons we learnt and how we did it.
In hindsight, regardless of the churn reduction approach, the top line secret sauce is brilliantly executed churn investigation and action bias towards findings.
Our product was designed to help customers learn and speak a new language to a certain fluency level. We had experienced tremendous growth and suddenly, churn numbers spiked consistently.
In this case study, I revealed mechanics on how we enhanced the user experience and built solutions to reduce the churn rates.
At the heart of our product lived engaging components like interactive videos, chatbot conversations and weekly lessons. Our reporting dashboard started buzzing and we realized a considerable number of users stopped using our product after downloading it and going through the onboarding process.
As a customer obsessed team, we prioritized the feedback mental model as our pointer for all our actions. We had to then engage our customers whilst building an efficient process for gathering feedback, analyzing data, and sharing findings with internal stakeholders.
Considering all user research methods, we decided on a mix of focus groups, unmoderated user testing and live conversations with our customers.
For better context, we built a quarter time swat team to fix this issue that consisted of – Product Manager, Design Lead, Engineering Manager and GTM lead.
Increase in churn rate – Defining the problem
This was a complex problem to tackle. Clearly, this was an onboarding problem. What increased churn rate? Why did customers stop using the app? We began digging.
At the high level, we had 2 stakeholder types - Language experts [ creators ] and Rookies [ consumers ]. Given the problem, we had to prioritize both segments.
We identified collaboration goals, talked about fears and obstacles, features, competitors, technical requirements, re-imagined our brand’s persona, and mapped the current and ideal user journeys. We also checked the analytics data that revealed critical data of how a lot of users stopped using the product after downloading and going through the user onboarding process.
Initial user research - Diving deeper.
Since these customers still had an existing version of the product, we decided to run user testing sessions (+ mini interviews) to discover the point at which customer onboarding went wrong.
To improve the user onboarding experience, we researched industry wide to gather all possible usability problems and ideas and placed them side by side with findings from our customers.
The goal was to benchmark the level of pain our product inflicted as compared to competitors.
As a result, we discovered three main issues that caused the increase in churn rate:
Users found the user onboarding flow annoying and could not relate to our messaging.
In-app navigation was very difficult, and users couldn’t find things they wanted very quickly.
A large segment of respondents had accessibility issues using the app.
Our Solutions to decrease churn rate
1) Initial user onboarding
The problem
Our onboarding flow was designed to tell the user about the backstory of a time traveller. It failed to show how the world became a chaotic place where people forgot how to speak languages, and that only the user can set things right by learning English and moving forward in time. Moreover, while testing the old version, we found that most people could just not relate.
They found the onboarding journey tough to understand – primarily due to confusing messaging. Some respondents who wanted some serendipity on the first app launch, got frustrated by loads of onboarding chat bubbles popping up, blocking their way. They felt overwhelmed and wanted to get rid of these things that kept appearing on their screens. They did not want a walkthrough. The UI was quite complicated and customers remained frustrated.
The ideal user journey
After discovering the problems our users had faced, we began building new wireframes. We developed ideas for the ideal user journey, wrote fresh messaging and eliminated almost all the chat bubbles. We replaced them with “Smart cards”– shorter, easier to understand instructions.
Our test variants became – chat bubbles vs. smart cards
With smart cards, the frustrating elements don’t pop up, thereby giving users autonomy. We then built a high-fidelity prototype and started testing it with people from the target audience. After a few iterations and alignment with the engineers, we had the final version of the onboarding flow.
Our GTM folks renamed our onboarding flow and we tested the name further with a focus group. We found that people enjoyed the new onboarding flow and finally understood the basic story as well. The ability to discover the app at their own pace eased their frustration.
2) Navigation and structure
The problem
Our engagement has critical issues where users found it difficult to isolate core lessons from practice exercises. This was worse because it impacted both onboarding experience and customer retention, dipping the churn rates even worse.
In many cases, people didn’t know their location. They found it difficult to go back to the homepage. This caused a huge engagement leak.
The solution
Our test results clearly established the problems our customers faced. So, we had to re-imagine an incrementally easier navigation and structure to improve user onboarding.
We built sticky note sketches to iterate through many of our ideas and discussed the pros and cons with the team. When we had a good enough concept on paper, we built it in the prototype to find out what our users thought about it. After a couple of iterations, our new navigation was born.
This was majorly an Android problem and we wanted to build consistency into it. We infused excellent copy that allowed users differentiate core lessons from other practice exercises. To validate this, we launched an unmoderated test session and through carefully worded screener questions, recruited potential users who fit our user persona.
With this redesigned framework, we got really clear feedback and iterated.
3) Accessibility issues
I know this is not very popular, but it is quite prevalent and not usually caught during root cause analysis. Accessibility issues definitely impact retention rate. The following section shows examples of how we fixed some of the problems.
Buttons that didn’t look like buttons
Nothing could be worse than users not locating your main call to action on your landing page. They’ll literally get upset. Imagine our frustration when we tested our app and this was the case.
For context, during several of our live moderated interviews with customers, we discovered our CTA button was usually mistaken for an advertisement because it looks exactly like most of the banners on the web.
A full-width rectangle with some text, it starts with the word “Buy” and a small label that says “-25%”. No one understood that this button would unlock all the lessons in this list and cost 25% less than unlocking the lessons individually.
First, we modified the copy and made the button look more like a button.
We then tweaked our reward system and realized this page didn’t need a “Buy” button any more. We could disable it.
User Levels were difficult to grasp.
Another critical threat to retention was around user levels.
Our live interviews sessions revealed that 75% of respondents were confused and couldn't make sense of how the levels were designed. We had 3 levels – Basic, Intermediate and Expert but they all appeared colorful, an intermediate learner automatically skipped basic level and this was quite haphazard to users.
So we modified this flow and redesigned the landing page In the redesigned version, users could easily identify their level accompanied with a “Current level” label (which ended up a good enough solution for color-blind people as well.)
Takeaways from the case study
Our swat team had 7 weeks to execute this and we learned tremendous lessons about user onboarding and ran over 150 experiments from messaging [ format and send time ], colors, positioning amongst others.
The moderated and unmoderated sessions proved that customers found the new version simple, easy and usable.
To measure impact post -exercise, churn rates dropped from a whopping 25% MoM to 5.5% MoM. We saw an uplift in NPS from 55% to 75% in 3 months.
Key Lessons ;
1) Understand the problem. It might sound like a cliché, but you cannot solve a problem if you don’t know what it is.
2) Select the best research method per time - Based on your target audience, prioritize the research method that gets them in their natural state.
3) Consider copywriting the most powerful tool in your toolbox as a researcher, particularly with user onboarding. Finding the right copy might not come easy but it tells a compelling story your users can quickly adopt.
4) Using the wrong UI elements can make your product inaccessible. Stick with platform-specific conventions and keep your interface as simple as possible.
CASE STUDY 2
In 2019, my team revamped a [growth stage] insurance product in South East - Asia [ Thailand ] .
When my team joined, the product had a huge and growing number of dead and dying users.
After speaking with customers using Focus groups, we discovered we had to build an algorithm to win customers back with intelligent messaging and offers.
We gathered the specifications and designed algorithms using a custom model based on how long they were a customer, their recent activity and sends tailored offers through email / SMS / USSD Push to get them back. In 3 months, we were boosting retention by 10% or more with no work on the part of our customers.
All we had to do was speak with them.
The concept here is simple. You need to reach your customers in the way they want to be communicated to. Our discovery from user interviews was that 60% of the churned users preferred their language and cultural preference. We would not have discovered this without user feedback.
PS - We knew churn recovery was a continual journey and we built mental models to track all user activity and on schedules, send out white labeled messages to recover customers who might be slipping. [ You need to define what slipping users means for your business - Metrics ]
In 6 months, our texts and emails grew to 4+ languages of the 9 major languages in the region. Ultimately, we were able to drive open, click through, and recovery rates from 7% to 28% in 2 quarters.
SUMMARY
Customer churn is not your friend.
Tough as it may sometimes seem, it is very possible to reduce customer churn given the right tools and the strategy. And hopefully, you will dip churn rates one experiment at a time.
But it starts with customer research. As I have found that when my teams actively engage in user testing, it turns out to be the most effective way of learning. It’s also a great way to avoid arrogance and relate to the people we are building for.