Decoding Retention: What Makes Customers Stay or Churn

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Brands can get an edge from their competitors with exceptional customer experiences that pave the way to retention. Good customer experiences allow businesses to build loyalty and retain customers for the long haul.

Let’s explore the three main aspects of this: 

1. Price differentiation to ensure that businesses always have the edge for pricing, especially for high-volume products;
2. Maximizing awareness for the product through personalised recommendations; and
3. Drive campaigns to always be within the consideration stage of the customer.

While these are effective strategies to stay ahead of the competition, it comes down to the product, which is the most powerful differentiator.

Leveraging the product to drive retention

Product-led growth allows brands to put the product at the forefront of all activities, using it to drive acquisitions, conversions, and retention. This involves understanding the customer journey, identifying and solving issues customers face in their journey. 

Grofers, one of India’s most popular online grocery delivery services, measures product-led growth by addressing a single question – whether the shopping experience enjoyable or not.

Creating enjoyable shopping experiences

To make shopping experiences enjoyable, brands need to understand what customers want and how the product helps them. They need to get understand the shopper’s mind and make the whole experience as seamless as possible, end-to-end. 

For instance, Decathlon, a popular sports e-tailer in the UK, focused on making their app experience seamless, encouraging customers to stay independent in their purchase journeys. The Decathlon team introduced a store location detector and a scan-and-pay feature, along with an ‘Exit Store QR Code,’ to onboard customers into an omnichannel experience. To prepare for a post-COVID world, the brand also introduced contactless purchase and pickup, which led to a 10% increase in their sales figures.

Stickiness: A measure of loyalty

Stickiness is the intensity with which customers repeatedly interact with a business. It measures loyalty and the ability to win new customers through referrals. Any product with high levels of stickiness will be able to retain more customers and achieve higher growth. 

For an online store like Flipkart, India’s eCommerce giant, the challenge of stickiness is in the business model itself. It is uncommon for customers to shop every day, and this makes it challenging to create stickiness. If the brand doesn’t remain the top choice for customers to make their purchases, it will be replaced by a competitor offering better prices, services, or a wider range of products. 

Through behavioral surveys, Flipkart understood that online purchases peaked during the first weeks of the month and reduced significantly after mid-month. To avoid losing customers during this interim period, Flipkart leveraged the power of gamification, creating short game videos that played sequentially. Customers who wanted a playlist of such videos were rewarded with a badge, and this experiment increased time spent on the website. As an allied benefit, Flipkart could also retain its customers because brand recall was strengthened.

From the customer’s perspective, a product is worth repeatedly using only if it helps get the job done efficiently. It should provide the simplest, shortest, and smoothest way to complete a task they otherwise find difficult to perform. This goes hand-in-hand with creating good customer experiences. Good UX removes friction in the customer journey, simplifying tasks and helping customers complete their intended tasks easily. Good UX is the fuel that drives product-led growth, acting as a differentiator that can draw in more customers and turn them into loyal customers. 

Retention in low-frequency usage

Apps with a low frequency of usage are often quickly forgotten since the average customer interacts with dozens of other regular utility apps every day. Even so, brands need to remain within the mind-space of customers to make them use their app when the need arises. The only way to ensure this is by delivering convenience right from the get-go.

American bridal wear brand Cocomelody faced a unique problem: bridal customers wanted to see, feel, and try on dresses before purchasing, which they couldn’t do online. Cocomelody introduced a ‘Try at Home’ campaign, which allowed customers to try any wedding dress for just $25.

The team segmented customers and sent out campaigns about this based on their purchase intent. This earned the brand a 14% in conversion rate.

Delivering convenience from the get-go

The first interaction any customer has with a product tests all expectations set by marketing and sales. A seamless onboarding experience is crucial for creating stickiness, and thereby retention. But the challenge here lies in creating an onboarding experience that is relevant to all customers.

Not every customer is the same—what one enjoys, the other might detest. Brands need to consider these complexities and create customized onboarding experiences for each customer according to their preferences. 

What matters most for retail retention

Everything is important—even the post-sale experience matters for retaining customers and preventing them from looking for alternatives. Customers expect the best experience from their first interaction to their last. The only way to ensure this? Place the product at the center of everything. Product-led growth is the fastest way for businesses to grow acquisitions, conversions, and retention. The biggest brands of the world today are utilizing product-led growth to create great customer experiences, encouraging loyalty and retention.

This article contains excerpts from an eBook featuring the world’s fastest-growing consumer brands, like Samsung, Flipkart, OYO, Kredivo, and more. Read the full eBook here