Talking Retention is where we chat customer retention with some of the world’s biggest brands. We ask how they think about loyalty and retention so that you can apply that knowledge to your business.
In this installment of Talking Retention, we are talking with Skillshare. If you want to get ahead of your colleagues by staying on top of the latest trends, or just want to delve deeper into topics you're passionate about, SkillShare is for you! They provide a subscription learning service that has led to some interesting views on customer retention.
We are talking to Cam Lay, VP of Marketing at SkillShare, to get his unique take on the importance of customer retention and how it plays a pivotal role in subscription-based businesses.
Views on customer retention
Here are Cam Lay’s views on how to increase your customer retention.
Retention consists of 3 key areas
According to Cam, there are three main areas you need to be aware of and working on if you want to improve your customer retention efforts. Those are customer engagement, product experience, and growth hacking.
- Customer engagement
- Product experience
- Growth hacking
When thinking about customer engagement, it is important to consider how potential customers view your brand and what you sell. These considerations should include not only how you compare to your direct competitors but also how prospective customers view other products or activities that can take them away from your experience.
This approach means you need to focus on knowing what makes your brand engaging if you want to boost your retention rates. This includes everything from product experiences like unboxing, your website, and social touch points, as well as the actual product or service you provide.
Growth hacking is the final area that Cam says is important, but it comes with a caveat.
Growth hacking can only get you so far
Growth hacking is a term you see scattered among every job description and business book published in the last five years, but what is it and how can it help with retention?
Growth hacking is all about making changes and measuring the results (usually with A/B testing). It allows you to find quick wins that can have an impact on how likely a customer is to stay with you and make another purchase. Including handwritten notes with a select group of orders is an easy way to see if those types of strategies work to get customers to come back again.
However, Cam also notes that growth hacking will only take you so far.
If you want to really impact your customer retention efforts, you need to evaluate what shoppers truly want from your brand.
Showcase what your customers "truly" want from your brand
It is very tempting to say “customers want what I sell,” however that’s rarely the whole story. You need to get an understanding of what truly makes them choose your brand or the products you sell in order to get the full picture.
For SkillShare customers, it is not about classes or individual topics but rather the desire to keep improving themselves with lifelong learning.
It becomes a lot easier to get a customer to stay and buy again if you know what is truly motivating them to purchase with you in the first place!
Churn is the most important retention metric to focus on
According to Cam, the most important metric to look at is your churn rate.
Churn is a metric used by many subscription-based business both in both the software and ecommerce spaces. Your churn rate shows you how many of your customers are not continuing to do business with you each month. If this is high, your retention efforts need to be tweaked.
Cam also mentions that breaking your churn rate into segments allows you to get a better picture of where you can focus your retention efforts.
While churn rates in commerce generally don't have an onboarding period, there are some great takeaways here. If customers are choosing not to return is it likely because of the product quality or the service and experience they received. While the solutions to these problems are drastically different, they can both be solved by paying careful attention to what your customers need and expect from your brand.
The future of commerce
After discussing retention specifically, we turned our focus to looking at the future of commerce in general. Here are Cam’s thoughts on how things are changing.
Retention and acquisition will complement each other over time
While there is value in acquisition and retention as stand alone tactics, Cam also believes that they can be also be used powerfully in tandem. He sees using retention efforts to open additional acquisition channels as a strategy for businesses moving forward.
By improving your customer retention you are able to increase each customer’s lifetime value, which means you can increase the maximum you would be willing to spend to acquire another customer. This opens up acquisition channels that may have been too expensive for you to try in the past when your retention was lower.
With strong customer retention driving up the lifetime value of each customer, you could also argue that you do not need to spend as aggressively on acquisition since the channels that cost less are still able to generate value.
Offer customer experience like a small store would
This is one thing that Cam and I are totally aligned on. Big businesses and online stores need to take a page from small offline retailers. Small business are often better-equipped to go above and beyond for customers to create a memorable experience, especially in the services space.
Most of these smaller retailers are more than willing to spend more time with each customer or offer something extra at no charge. That’s because they know that this is an investment into future value from those customers.
When you are separated from your customers by a screen, it does become a bit more difficult to offer this level of experience. Thankfully tools like live chat, CRM systems, and reward programs allow you to offer tailored experiences that focus on an exchange rather than a transaction.
What brands have you see excelling with customer retention and experience? We would love to get them featured. Let us know @smilerewards!