7. Hacking Retention Flashcards
What is the primary purpose of business according to Peter Drucker?
To create and keep a customer.
What is customer churn?
The rate of loss of new users.
How does a 5% increase in customer retention rates affect profits?
Increases profits by 25 to 95 percent.
What is the significance of high customer retention?
It is a deciding factor in achieving strong profitability.
What are the costs associated with acquiring new customers?
It takes significant money to acquire a new customer, especially with rising advertising costs.
What percentage of customers returned for a second cleaning at Homejoy?
Only 15 to 20 percent.
What is Amazon Prime known for in relation to customer retention?
It has a high retention rate, with 73% of free trial subscribers converting to paying subscribers.
What is the renewal rate for Amazon Prime subscribers heading into their third year?
96 percent.
What effect does high retention have on revenue?
It increases opportunities to earn more revenue from upselling and renewals.
What is the relationship between retention and advertising revenue?
Higher retention can lead to more advertising revenue as advertisers want to target a loyal customer base.
What is growth hacking?
A method to quickly identify and test strategies to improve customer retention.
What are the three phases of retention according to Brian Balfour?
Initial, medium, and long-term.
What defines the initial retention period?
The critical time during which a new user decides to keep using a product or goes dormant.
What is the key factor for retaining customers during the initial retention phase?
Providing high value during the initial use.
What is the core mission for growth teams during the medium retention phase?
To make using a product a habit.
True or False: Companies can assume customers will continue to engage without effort.
False.
What is a stable retention curve indicative of?
A measure of product/market fit.
What does the ‘Smile Graph’ represent in relation to Evernote?
The longer users engage with Evernote, the more likely they are to continue using it.
Fill in the blank: A company must continuously work to improve its _______.
[offerings for customers].
What happens when a company fails to communicate optimally with customers?
Customers may defect over time.
What is the impact of customer loyalty on word of mouth and viral marketing?
Higher retention leads to stronger results from both.
What does it mean to have achieved product/market fit?
A stable retention curve.
What is the relationship between initial retention and long-term customer loyalty?
Higher initial retention increases the likelihood of long-term loyalty.
What is the core mission for growth teams in retaining users in the midterm phase?
To make using a product a habit.
What is the goal of habit formation in product usage?
To create a sense of satisfaction that users incorporate the product into their routine.
Give an example of a habitual product user.
A Snapchat user who constantly checks friends’ stories during breakfast and dinner.
What is essential for long-term user retention?
To assure that a product keeps offering customers more value.
What must teams experiment with to improve retention?
Ways to keep improving the product and determine timing for enhancements.
What is a key metric for measuring retention in e-commerce?
The repurchase rate of customers.
How often do grocery app users typically shop?
At least once a week.
What is the relationship between retention rate and churn rate?
Churn rate is the inverse of retention rate.
What is cohort analysis?
A technique to break down retention data by specific subgroups of users.
What is one way to categorize cohorts?
By the time of acquisition.
Why is tracking retention by cohorts important?
It helps identify issues with retention and understand customer behavior over time.
What might a growth team discover through cohort analysis?
High churn rates during specific campaigns or time periods.
What is a retention curve?
A visual representation of the retention rates of different cohorts over time.
What can a sharp decline in retention indicate?
Issues with product fit or customer satisfaction related to marketing efforts.
What should a team do if they notice a drop in retention?
Investigate the causes, potentially through customer surveys.
How can cohorts be further analyzed?
By the channel that brought customers or by their usage frequency.
What is a tipping point for customer retention in e-commerce?
Making three purchases within the first month after sign-up.
What tools can be used for sophisticated cohort analysis?
Mixpanel, Kissmetrics, or Amplitude.
What is a key strategy for improving initial retention?
Refining the new user experience to showcase the product’s core value quickly.
What is the Hook Model?
A framework for understanding habit formation through external triggers.
What is the role of external triggers in habit formation?
They prompt action that initiates engagement loops leading to habit formation.
How does the psychology of joining a gym relate to habit formation?
External triggers motivate initial attendance, which becomes internal motivation over time.
What are some examples of habitual product use?
- Checking Facebook during breakfast * Posting on Instagram after work * Using Yelp for restaurant recommendations.
What happens to individuals’ need for external prompts after they experience rewards from an activity?
They often no longer need external prompts because the internal, subconscious triggers take over.
What are the two essential rewards offered by Amazon’s Prime program?
- Free shipping
- Two-day delivery
What was a common prediction about Amazon’s Prime program?
Analysts predicted it would fail due to unsustainable free shipping costs.
How did Amazon Prime change customers’ shopping mentality?
It made them less likely to shop elsewhere due to perceived savings.
What is a key factor that contributes to habit formation in products?
Improving the perceived value of rewards.
What should growth teams do to enhance habit formation around their product?
Experiment with a range of rewards and encourage customer actions to receive them.
What is an example of a behavior that could be analyzed to create new rewards in a video streaming service?
Binge watching habits.
What are two types of rewards that businesses can offer?
- Tangible rewards
- Experiential rewards
What is the Yelp Elite Squad program designed to do?
It offers social recognition and perks to engaged users.
What is a notable strategy for enhancing customer loyalty mentioned in the document?
Brand ambassador programs.
What is the significance of achievement recognition in customer engagement?
It shows appreciation for customer milestones and actions.
What is the role of behavioral emails in customer retention?
They notify customers of milestones and encourage further engagement.
How has personalization in marketing evolved according to the text?
From a one-to-many approach to one-to-one customized experiences.
What is the next wave of personalization powered by?
Machine learning algorithms.
What does Pinterest’s Copytune program do?
It tests variations of notifications to optimize user engagement.
What can companies do to experiment with personalization in customer communication?
Use email marketing software to vary content based on past behavior.
What is a common retention strategy for SaaS products and content providers?
Communicating upcoming features or product offerings to maintain customer interest.
What is the purpose of using new features as a retention hook?
To communicate upcoming benefits to customers and encourage them to remain subscribed.
Which types of products benefit most from the ‘Coming Soon’ tactic?
- SaaS products
- Videogames
- Content providers (e.g., Hulu, HBO)
How does Netflix effectively use the ‘Coming Soon’ strategy?
By spacing out the release of new seasons of original series to keep subscriptions active.
What is the impact of announcing a show like Rome on HBO’s customer churn?
HBO experienced almost no customer churn between the announcement and the show’s premiere.
What is feature bloat?
The introduction of too many new features too quickly, complicating products and obscuring core value.
What did researchers find about the relationship between the number of features and customer lifetime value?
Too many features can decrease customer lifetime value.
What is ongoing onboarding?
A continuous process of educating customers about the value of new features over time.
What is the ‘ramp up’ process in user experience design?
Gradually introducing users to new features after they master previous ones.
How can growth teams test the effectiveness of ongoing onboarding messaging?
By sending emails to test groups with different versions of explanations and imagery.
What is the term used for winning back users who have abandoned a product?
Resurrection.
What are common reasons for customer churn that can be controlled by the company?
- Not installing the app after getting a new device
- Lack of engagement with the product
What should be included in a resurrection flow for inactive users?
A series of email communications or targeted ads designed to win them back.
What percentage of users returned to Inman’s site after receiving a targeted email notification?
29.4 percent more returned compared to the control group.
True or False: Overdoing targeted email notifications can annoy customers.
True.
What is a potential downside of constantly attempting to win back cold customers?
It may tarnish the customer’s view of the company.
How can companies identify ‘zombie customers’?
By investigating why users have become inactive or canceled their service.
What is the ideal scenario for customer education regarding new features?
Leading customers on a continuous journey of discovery.
What role do growth teams play in the introduction of new features?
They evaluate the appeal of planned features and suggest experiments.
Fill in the blank: Companies should consider having a larger number of more specialized products, each with a limited number of _______.
[features].
What is a recommended approach to rolling out new features?
Testing prototypes or beta versions with a small percentage of users.
What is the significance of timing the rollout of new features?
Rolling out changes too quickly can result in customer backlash.
What is the main goal of the growth team when analyzing user data?
To uncover new product optimization opportunities.
