Customer Retention: Another Phase in the Buyer's Journey

Blog Post
May 04, 2018

Photo credit: @trevoredenton on Medium

How much more profit would your company generate with a small improvement in new customer retention? For most firms, the answer is, “A LOT.” A simple Google search generates statistics that show it costs between 5X-25X as much to acquire a new customer as it does to retain a current customer. So, we as marketers need to consider our acquisition efforts complete only at the point when we can confirm we have solidified a customer relationship. That point is different for different verticals, but for all of us, it is well after the first purchase is made.

A critical step in retaining new customers is making sure they are fully onboarded and activated. This is the phase of the customer journey when account set-up takes place, features are taken for a test drive, customer service channels are used, and the habit of repeat purchase begins. Think of it like a new student orientation: those first few days at college when you got your class schedule, bought your books, decked out your dorm room, and toured the campus. Enrolled in school, but not fully a college student. 

Help Customers Complete Their "Jobs to be Done"

The most important thing we can do for new customers during this phase of their journey is to help them with their critical jobs to be done. The Jobs-to-be-Done framework has been pioneered by Tony Ulwick, CEO of Strategyn. It’s the idea that consumers are buying a product for the outcome it produces or the job it helps them complete. For instance, not many people really want to own a car. Most of the time, their job is to make a trip from Point A to Point B in a convenient fashion (hence why ride sharing is so popular). When it comes to onboarding, we need to help our customers complete their jobs by setting them up to get maximum utility out of their new product or relationship.

Real-World Onboarding

There are some great onboarding examples out there that help customers to complete their jobs. For instance, Best Buy sends triggered emails that arrive about the same time that customers arrive home with their new purchases. These emails are personalized with the customers’ names, along with helpful information about the products that were just purchased. Best Buy takes the additional step of providing contact information and links to the Best Buy customer service department. Right when customers are about to set up their new toys and fire them up for the first time, Best Buy is there with resources to help answer questions they may have about setting up or operating their gear.

Another example comes from Huntington Bank. During the first 30 days of the new customer relationship, a series of emails is triggered based on customers’ product purchased, financial profile, and level of account activation. The emails instruct customers on how to set up basic functions like direct deposit, online banking and BillPay. But the customers only receive these emails if necessary. If customers have already set-up a particular function, they don’t receive an activation email. With all the different possible combinations of products, service activations, financial profiles, etc., customers can receive one of over 1,200 dynamically-populated emails. Messages also appear in online banking and are populated in Salesforce so bankers can help customers with their onboarding needs.

In both of these cases, the firm is continuing the customer journey based on the job to be done.

Getting Started with Best Practices

If you are ready to take your first steps and test this idea by piloting a campaign, the best thing to do is to steal liberally from industry best practices. Which industry does the best job of onboarding new customers? You don’t have to look any further than your phone. App developers are becoming the best examples of how to get new customers to continuously engage with a new service. Evidence of this shows up in recent use and retention statistics. Research published by Localytics in 2017 shows that app retention rates have climbed by 30%. Apps are not only staying on phones at a higher rate, but are also being used more frequently in the 3+ months after download.

It is critically important for app developers to drive activation and use after their apps are downloaded. Outside of Facebook, banking apps and a few of the other high-volume apps like Netflix, everyone else is fighting for space on your phone. Think about how many apps you download in a year and only use once or maybe twice. 

What is it that app developers do to continue to help customers with their jobs to be done as they move to the onboarding phase of the buyer’s journey? There are three best practices that can be borrowed from the app vertical and added to a current or new onboarding program:

1. Know the Path to Profitability

Best-in-class firms know how their most profitable customers behave during onboarding. They look at use data and know their most profitable customers' average login frequency, page views, service activation rates, etc. They then use that knowledge to create a target path for new customers and message accordingly to move the new customer along toward a profitable outcome. The workout tracking app Map My Run (owned by Under Armour) does a masterful job of this. New users get a status update when they login that shows the statistics from their most recent workout and also suggests new features to try. 

2. Be Channel Agnostic

Whether you are a bank, a retailer, or an app, not every customer is going to use the same channel every time. It’s the nature of the buyer’s journey. It belongs to the buyer and s/he decides what channel will be used for any given interaction. Make sure the onboarding program is present in as many channels as possible: email, online, point of sale, etc. The Starbucks app is the supreme ruler when it comes to being multichannel. There is no better example than when I am in Starbucks and my app tells me what song is playing in the store (see image above).

3. Show Customers Their Progress

We all like to see how far we’ve come with a task. Whether it’s a growth chart marking our height on a door frame or merit badges earned in scouting, these are life’s minor victories. We can use this psychology to encourage new customers to keep moving through the onboarding progress. Showing progress also lets new customers know how much more they need to do in order to get an account fully activated. LinkedIn does this with the use of a progress bar to show new users how complete their profiles are. LinkedIn then provides suggestions on how to make your LinkedIn profile even more complete and attractive.

Continuing to help new customers with their jobs to be done is key to fully onboarding them and moving them through the purchase phase to the post-purchase and advocacy phase of the buyer’s journey. App developers have figured this out as they fight for space and attention on crowded smartphone screens. By helping new users get fully oriented to app features and functionality, they have increased both retention and active use rates. Using some of the best practices from the world of app developers can help boost the performance of any new customer onboarding program.

Want to dive deeper into customer retention? Check this one out. Customer Retention: A Framework to Follow and Pitfalls to Avoid.