What are the best practices for customer retention?
Clients use paid software for a specific need, so clients will keep using your product as long as that need is satisfied and value added. Beyond having an awesome product, here are some data-driven recommendations on how to help customers engage with your product:
Segment client base by behavior
Before jumping into engagement and retention strategies, it is important to first segment your customers by usage patterns. This will help you understand how different customer groups are using your product and develop tailored engagement strategies.
Among other things, you can look at the time between user purchases, logins, length of sessions, and types of events/actions performed by a user or account. The time between user actions and lengths of sessions can help you identify behavioral patterns and distinguish between normal behavior and abnormal behavior (sudden increases or decreases ). Tracking whether users have ever performed a certain type of action also provides insight into how much knowledge the customer has regarding your tool, and how they are using your tool.
Based on the metrics above, you can now segment your customers by activity and knowledge level (e.g. High, Medium, Low). For example, someone that uses the tool a lot relative to your entire client base, but has only performed 1 of the 20 possible activities may fall under the “High Activity, Low Knowledge” group.
Tailor engagement strategies to different customer segments
Depending on your client’s behavior identified in step 1, you now need to design tailored engagement strategies for each group. For example, someone that has low activity may need help understanding what value your software provides, whereas someone with low knowledge may need more training or education on the full capability of your tool.
Multiple outreach channels need to be leveraged to achieve these goals: Email, account management calls, tutorials, etc. Depending on available resources, you’ll need to design a retention strategy that leverages all relevant areas of your business.
Identify when users are at-risk and develop a risk mitigation plan.
After you’ve started a tailored retention campaign, you’ll need to keep your eyes on new clients that display signs of becoming a customer “at-risk” of churning. Track users that have sudden increases and decreases in a certain type of activity. Users that perform a certain type of events everyday, but suddenly stops may indicate that a specific user may have left their organization, or that they found a new tool. If changes happen, try to understand what caused them and develop a plan to address the risk.
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