- Prevent people from unsubscribing
- Prevent people from canceling their orders
- Discounts if buy every day/week/month
- Sending tons of emails with fake site activity ("somebody sent you a message"-style)If you have a Spotify subscription, try to cancel it.
As I've been trying out various companies for different (B2B) services over the last few months, I've noticed the wonderful "sign up in a few seconds with your credit card!" onboarding paired with "contact our customer service team if you want to cancel," which inevitably leads to a protracted discussion with a retentions team.
If there was any chance I'd have recommended them (or at least not actively recommended against them), that ship sails when I have to invest more time into offboarding than onboarding.
SHARMA: Thank you for holding sir I do apologize for that wait. But it’s just what I was advised is that the system is not set up for customer’s to cancel the recurring bookings because when you want to cancel, they’re wanting the customers to call in to see if we can help the situation out on actually why they’re wanting to cancel the bookings and offer promotions and discounts and things like that.
I remember closing my account for a certain online dating site. I was presented with three different screens asking me whether I was really sure about canceling, and after that I was greeted with a message that read (more or less) "We've closed your account. Sometimes things in life take a bit of effort, you know?", which was the first time ever a website called me lazy.
The fact that it played like a bitter breakup was not lost on me.
Most of this is widely known as "Dark Patterns".
The only way to retain customers is to continue to provide them with value
[1] One way of achieving infinite marketing budget is to offer discounts for annual prepay, if e.g. you get 25% of customers to pay 10 months upfront (annual plan with 2 months free), you receive 25% * 10 + 75% * 1 = 3,25 monthly payments in month 1. If you get CAC below 3,25 ARPU then you have infinite marketing budget and that can indeed go geometric. But that's a big if, and even then at some point your marketing channels will dry up at some scale, while churn remains the same at scale as businesses keep dying or changing their mind.
But for the purposes of illustration it is the easiest to keep all the numbers fixed and let only one of them vary.
The herd behaviour.
Word of mouth.
People like to see an application has a lot of good reviews and users to buy, so your growth is a percentage of your users.
It would be interesting to know when the number of users is increasing as a percentage or as a fixed number depending of the sector. Is there available data for the growth of users by sector/product/industry?
Personally I feel focussing on growth is focusing an all pirate metrics, but one or two at a time. You shouldn't solely focus on acquisition or activation. Especially if your retention is too low. But sometimes your retention is good enough so you can focus on other things.
If your retention is good enough (> 98% month-to-month) then you can focus on other things but if it isn't then you're likely going to burn through a lot of cash faking growth when you really should be focusing on why people are leaving and fixing that first before you spend the big marketing bucks.
Likewise, I'd rather use a dating website to meet a long-term partner (and cancel my subscription) than go on a bunch of unsuccessful dates leading to short term relationships (keeping my account open).
A dating website that is delivering what customers want /should/ have low retention. A dating website with excellent retention has probably decided retention is more important than getting their users into long-term relationships.
What if you have a customer lifetime value far higher than your acquisition costs per customer, and a very wide addressable market, but low retention rates? E.g. I acquire users for $5 each and same-day convert them to $15 profit each, and they rarely come back unless I return some of the profits back into the funnel to acquire them again.
You may ask - Shouldn't we assume that that growth channel will quickly collapse? -- Well, what if it doesn't? Something is very wrong with the trend of assuming that retention is everything, particularly in the case where there's a high immediate return on investment for each acquired user.
My second problem with retention is the time-span. Consider an ecommerce site for basic household necessities that may be accessed 20 times per year by a 100% retention user that always uses your service to his problem that your service solves. That return frequency is so low though, that if you're growing at 40%+ month over month, your retention may appear to be near zero, even though your retention is near 100%! Most of your users are new users and only a tiny percent returning, all due to your high growth rate. The compounding growth combined with the long expected time between visits just makes 100% retention look like 0%.
A good financial model captures the scenario you describe. The examples in the article should be seen as illustrative, not exhaustive.
So in my example, I can get a very high percentage of people to return if I continue to spend money. But if I stop spending money to acquire users, they mostly stop coming back.
Nail retention before virality and you won't be a fad.
1. Do well on retention before doing well on virality and you build a long-standing business (facebook).
2. Focus first on retention, ignore virality, do poorly on both and never build something worthy of even being called a fad (many, many, many startups).
1) It is very important to retain relationships with people. Friends from four years ago can help you so much today. But, that means you need to help them at times, too, of course! :) 2) It is important for companies to retain their staff. They have knowledge and connections. Loyalty is hard to buy, if a person wants to help their company because they are loyal, that is the difference between adding that case/test/log/whatever and "just forgetting about it." 3) It is important for people to build strong relationships with companies, just as it is important for companies to retain relationships with clients.