Last Wednesday we hosted our Growth Clinic: Retain or Die. This was the second iteration of our quarterly Growth Clinics (the first took place back in November of last year), where we bring in industry professionals to share their advice and insights on achieving sustainable growth.
This time, we focused on the most important metric that underlies growth — retention.
Over 200 people joined Naomi Pilosof Ionita and Miguel Dergal of Invoice2Go, Anne Yeung of Square, Julia Lipton of Rise, Fareed Mosavat of Instacart, and Brian Balfour of Hubspot & Sidekick to learn how they think about retention and use it to promote a data-driven culture within their companies.
Couldn’t make it to Growth Clinic: Retain or Die? Here are four key takeaways from the event. For more details, be sure to watch the full videos linked below!
Key Point 1: Make sure you’ve achieved product/market fit.
“Most of the time when there’s a retention problem,” said Brian Balfour (formerly VP of Growth at HubSpot), “the actual problem doesn’t have to do with optimizing retention. It has to do with product-market fit.”
Before you even start thinking about growth, our speakers across the board agreed that you have to make sure your product solves a problem or fulfills a need of a specific market. Only then can you even think about scaling your company.
Naomi Pilosof Ionita of Invoice2Go, for example, said she never had to think about retention in the trivial sense of seeing whether changing the color of a button made a difference or not. Invoice2Go was already successfully fulfilling a need — the need for small and micro-businesses to quickly and professionally send invoices. The retention strategies they centered on were around understanding their users better and making product changes.
“There is no growth without product-market fit,” said Naomi.
Key Point 2: Define what retention means to you.
Once you know you’ve achieved product-market fit, the next step is to think about what retention means to you. What type of metric makes sense? Should you look at daily, weekly, or monthly retention?
Miguel Dergal of Invoice2Go said, “You can start with DAU and MAU but ultimately you have to make sure your retention is tied to the value that you deliver to your customers and the value that you deliver to your company.”
We learned from Anne Yeung of Square that one of Square’s key retention metrics is looking at the number of active sellers that use Square in the past month and past year. Square knows that switching payment platforms can cause friction for a business — so, to get a sense of how frictionless the switch can be, they also measure attach rates of Square’s add-on services.
Customer Insights Panel with Anne Yeung (Analytics at Square)
How do you know, like Square, to look at retention on a monthly or yearly basis, as opposed to daily or weekly? Both Brian Balfour and Julia Lipton of Rise say the key is to focus on your users’ natural behavior. Specifically, you should ask yourself what the frequency of engagement with your product is. Does it make sense for your users to engage as frequently as you predict they will? Does your product add value at each interval? For that, you have to get into your users’ heads.
Key Point 3: Make use of both qualitative and quantitative data to get into your users’ heads.
Sometimes the best way to figure out a strategy for improving your retention is by getting to know your customers, both in a qualitative and quantitative sense, says Miguel Dergal. You can start out by simply talking to your customers through interviews or surveys to figure out what features they like the most and what features need improvement.
In fact, Julia did just that at Rise. Rise — a nutrition coaching app — used to have a drop off about 2 weeks after sign-up. When the team called these customers, they all said the same thing: “We love the product, but we don’t think we matched with the right coach.” By adding a “Switch My Coach” option, the growth team at Rise retained 15% of these customers who would have otherwise churned.
Once you’ve talked to your customers, it’s important to validate what they’re telling you with analytics. Invoice2Go’s Miguel Dergal says you should dive into your funnels and look at drop-off points and also investigate what actions correlate with your users being retained. The next step is to really slice and dice your retention curve.
Customer Insights Panel with Naomi Pilosof Ionita and Miguel Dergal (Growth at Invoice2Go)
Key Point 4: Slice and dice your retention curve.
“Slice and dice your retention curve, both horizontally and vertically,” said Brian Balfour. To come up with an actionable plan to improve your retention, it’s important to investigate factors that affect the different stages of retention — early, mid, and long-term — as well as how different segments of users retain at each stage.
Often, fixing problems of user activation is the “biggest bang for your buck,” said Julia Lipton. And that’s because if you can manage to make a really good first impression, you’ll have people sticking around for longer. Some of the earliest retention “wins” you can achieve, said Fareed Mosavat of Instacart, is fixing simple operational issues – bugs, for example.
Miguel brings up another key way to slice and dice your retention curve. Look at retention as a distribution, not just as an averages. “It is in the tails of the distribution where you find the opportunities,” he said. These “power users” are the ones who will be providing your company with the most value. Square, in fact, has a whole team dedicated to monitoring their power users. “Almost 40% of our process, volume, and revenue comes from a segment of users we call ‘large sellers,’” said Anne. “Retaining this group of large sellers is really important to our business.
Retention Panel with Brian Balfour (former VP of Growth at HubSpot), Fareed Mosavat (Product and Growth at Instacart) and Julia Lipton (Head of Product at Rise)
To hear more of what our fantastic speakers had to say, be sure to check out all the videos included in this post. Special thanks to Naomi, Miguel, Anne, Brian, Fareed, and Julia for being incredible panelists!