Customer Retention - Are You Missing this Vital Element of Growth?

The term "Growth Hacking" or Growth Hacker Marketing itself suggests that growth is a primary goal, or to use a little nerd speak, we could say it's a prime directive.

But growth takes place in many ways depending on the stage a business is in.  Growth can take place in a long established brand just the same as it can in a start-up.  Growth can also take many forms, depending on what the team has determined to be the goal.

Growth is measured in users, customers, revenue and several other ways that can demonstrate movement in the right direction and traction.  While revenue may the be the life blood of a business in the eyes of many people, I would suggest that traction is the oxygen.

But to often, way to often, growth is equated to acquisition.  Acquisition of customers, users, downloads, signups or whatever it may be. Marketing teams can become so focused on acquiring new customers that customer retention can get overlooked.

When this happens, customer acquisition begins to work in opposition to growth and you become the little mouse on the wheel above (courtesy of www.animateit.net).

"If you are focused on profit, Customer Retention will boost your profits. 

According to research by Bain&Co, just a 5% improvement 

in your retention can boost your profits by anywhere from 25% to 125%."

In Growth Hacker Marketing, we should be thinking about customer retention and the potential lifetime value of a customer from the very beginning.  A customer, mind you, that you've worked hard to attain and probably spent money to gain.

I think about a primary term used in Growth Hacker marketing, Product/Market Fit.  Have you really achieved PMF if your product or offering can get new users or customers but can't retain them?  If you have high churn rates, you're leaking customers as quickly as your acquiring them.  If that's the case, it sounds antithetical for marketing teams to have meetings about the next "viral" marketing strategy. No, it doesn't sound antithetical, it is antithetical.  How can you attain viral growth if you lose users at the rate you gain them?

The churn rate or fixing the churn rate should be sending the entire team back to the drawing board to address the problem before the word acquisition is muttered again because something suggests that you don't have PMF.  Hopefully this can be discovered while you're in still in your testing your product or offering with your minimum viable product (MVP).

To me, the value of growth hacker principles and growth hacker marketing and where it distinguishes itself as a better way is that we are ok with admitting and actually seeking ways to reveal how our product or offering sucks and jumping at the chance to attack the issue to fix it.  It's not about being ok with taking a crap product to market simply because that's what we were hired to do.  It's also about the entire team collaborating and recognizing crap and fixing it as the goal of taking a great product or service to market.

In a previous blog post, I shared a recent research brief that suggests user engagement is becoming a greater focus by marketing executives.  But placing value on customers and users is not an after thought or separate thought for growth hack marketers.  Growth hackers build that into the product, offering and marketing from the start.

A few days ago, Popcorn Metrics shared a great blog post that offers 5 Customer Retention Strategies to Increase Growth that I would offer as a must read for anyone that's responsible for growth or on a team that is.

This all reminds me of a meeting I was in a few years ago with the team of a young consumer product start-up.  They were an eCommerce based business and the conversation was about marketing and their SEM spend. Through the course of the conversation, one of their team members, very casually, stated that they were aware that their eCommerce shopping cart was wonky and was probably causing some failed transactions.

After this was said, I looked around at their team for some sort of reaction, but nothing, they just went on talking about ad spends and projected budgets.  Needless to say, I was a bit shocked.  Did I just hear that right?

Now, here's were a growth hacker may think differently then a traditional marketer.  If I were there as a regular marketing consultant, I could have easily dismissed the fact that they had a broken shopping cart and just focused on getting a big ad budget out of them.  After all, website UX is not my responsibility as a marketer, right?  That's the dev team, right?  But I just can't roll that way.

When I got the chance to speak, I could not help but ask why they were even talking about an Adwords spend when they knew they had a broken shopping cart?

If the idea is to continue running search ads with a broken cart to keep building awareness while you work on it,  then go in the corner and think about that.  While it may be creating awareness, it's building awareness of a bad UX!

But here again, as I stated at the start of this post, it's so easy go myopic and focus entirely on customer or user acquisition that the obvious is missed.  A broken shopping cart is just as much a part of the conversation of growth as is an ad spend.

Check out the 5 Customer Retention Strategies to Increase Growth that I shared above and I look forward to sharing more about exploring the inner growth hacker next time.