How to improve retention, growth marketing’s golden metric

Imagine being able to acquire users for just a few cents. Sounds like a dream come true to any growth marketer, doesn’t it? Now, imagine the same scenario with the worst retention rate possible, and it quickly sounds like a nightmare.

Whether you’re a construction company, software startup or Fortune 500 company, retention is a key metric across customers, employees and partners.

Growth marketing isn’t the silver bullet to solving retention, but there are definitely some tactics that can be implemented to help improve it.

Let’s dive in.

Growth and product

Within a company the growth and product teams should fit like a glove. While at Postmates, I saw firsthand how a well-oiled machine could work together to tackle customer conversion and retention. We used to hold weekly meetings between teams to address conversion rate trends and customer stickiness between growth media.

I believe the three key foci for growth and product should be:

• Enhancing measurement capabilities.
• Channel-specific landing pages and/or flows.
• Testing new products and initiatives.

A consistent issue and theme that I’ve seen cause countless headaches across startups is the lack of measurement capability. Measuring conversion volume accurately is paramount for all companies. Otherwise, efforts become inefficient.

It would also be naive to think that measurement is a set-it-and-forget type of task. Measurement should be approached as a constant work-in-progress, as channels and the privacy landscape are constantly evolving.

Working in step with the product team on specific growth campaigns will help you personalize initiatives, measure them accurately and increases the chances of success. Imagine having a specific funnel for visitors who are net-new versus re-targeted. Or, how about having different landing pages just for influencers? These are just some of the examples of the tests that the growth and product teams should be performing.

Whenever a new product, feature or promotion is launched by the product team, the growth team should be the first ones to get their hands on it. All campaigns from the lifecycle and the paid acquisition teams will be the first touch point for customers, so ensuring there’s understanding between these two teams is crucial.

If the growth and product teams work in lockstep and prioritize the key foci mentioned above, you’ll see huge leaps in retention.

Channel effectiveness

When I was working on fleet (or driver) acquisition at Postmates, we went from budgeting using simple methodology to measuring channel effectiveness on an LTV and retention basis. How long did our drivers stay on the platform, if they were acquired from Google as opposed to Facebook?

Such were the questions we sought to answer by using collected data and slicing it in a multitude of ways.

Here’s an example of what a basic analysis looks like:

By looking at channels beyond their initial customer acquisition cost (CAC), we were able to understand which channels brought in the highest value users.

In the analysis listed above, Indeed seems to be the one of the weakest performing channels at a CAC level. However, when looking at the lifetime rides that an Indeed-acquired driver makes, their LTV/CAC ratio is 22.50, which actually puts Indeed as the second-best performing channel. If we had only measured effectiveness based on CAC, Craigslist would be the No. 2 performing channel, which would be misleading as to actual performance.

It’s imperative to constantly analyze the sources driving growth at a detailed and bottom-of-funnel level. This is a surefire way to increase retention and focus on what’s driving efficient growth.

Owned channels

What’s better than leveraging free tactics to improve retention? Nada. Say hello to owned channels. These are channels like email and push notifications, where you communicate with users who have already been acquired.

The ultimate goal is to nurture and keep those users engaged so that they stay loyal to your product or service. While not an exhaustive list, here are some of the top themes I recommend leveraging to increase retention:

Feature explanations and recommendations

Offers and discounts

Testimonials and feel goods

Now that we have defined the key content themes, we should determine how to bucket users into these different cohorts. Every startup will have a different approach to bucketing users, but there are a few key questions that can help you with the process:

• When does the average user churn?
• Why are users churning?
• What has worked to win back users?

To continue with my Postmates fleet example, we worked on answering these questions, including setting up communications and promos to discourage drivers from dropping off, new app enhancement notifications, etc. We also focused on evolving our style of communication, using responses from drivers to gain further clarity on why they were churning, and the types of offers that would bring them back.

Happiness score

At the most basic level, if the product or service your startup offers makes people feel good, happy and gives them a sense of value, they’ll stick around. And they’ll exude that happiness by recommending your product or service to friends and family.

Make sure you’re constantly getting feedback from users who love your product as well as those who didn’t stick around, because each will provide tremendous insight. Having a constant pulse on feedback will improve retention and help enhance all growth marketing efforts more than anything. There are thousands of tools to help combat churn. I would highly recommend doing research on the ones that apply to your startup.

Finally, think of it this way: If you believe that happiness is a reason people stick around in relationships (including between users and products), you’re on the right track to solving retention.