Retaining customers is a crucial aspect of any business, yet it’s often overlooked. Many businesses focus solely on acquiring new customers rather than keeping existing ones.
I refer to this approach as quick-sanding. You’re relying on new customer acquisition due to your retention or returning customer metrics are either miniscule or non-existent at all.
Preventing churn is just as important as winning new customers and in this article, I will explore how focusing on activation during onboarding can solve retention issues.
Activation vs. Churn
Often, companies put themselves on the backfoot by solving retention issues fighting churn when it happens or by attempting to win back customers. Both are perfectly reasonable tactics as your last possible attempt to retain the customer.
A more significant impact alleviating aforementioned tactics can be made during the onboarding process. By identifying your aha-moments and reducing any friction during onboarding you can prevent churn before it happens.
Measuring Activation for D2C Brands
For direct-to-consumer (D2C) brands, measuring activation can be challenging.
Approaches can vary depending on the type of product but a rule of thumb is to look at drop-off rates between the first and second order for a product that is bought more than once.
If your data reveals significant drop-offs, it’s worth focusing on activation.
Focusing on Activation
Focusing on activation means working on two things: onboarding and getting the user as quick as possible to experience the aha-moment(s).
Reducing friction during onboarding is essential. This includes making it easy for customers to understand and use your product.
Communicating the value of your product effectively, both before and after purchase, is also crucial.
Creating moments of high impact is another way to improve activation.
These moments should help customers unlock the full potential of your product and feel more connected to your product and brand.
Creating a Habit
Finally, it’s essential to create a habit around using your product.
By making it a part of your customers’ daily routine, they are more likely to continue using it and become loyal customers.
Retaining customers is often overlooked by businesses who focus solely on acquiring new ones (“quick-sanding”).
Businesses are advised to widen their focus from solely relying on new customer acquisition to retaining those they’ve already invested their (generally tight) acquisition budget in.
However, as we’ve just learned, retention is influenced by a user’s first experience and interaction with your product or service. Therefore, by reducing friction during onboarding, identifying or creating moments of high impact, your product’s aha-moments, and creating habits around using your product, businesses can increase your customer’s loyalty – their lifetime value (LTV) and set up for long-term success.