How to Reduce Churn & Sell More with Customer Insight
How do you sell a software/service to someone you know little to nothing about?
And even more challenging, how do you keep that customer?
Maybe you’re asking these same questions. Perhaps your buyers are excited about your product for the first few days. Then slowly, usage declines until one day, he no longer wants it. Even though he thought it was amazing, it isn’t being used because it doesn’t exactly fulfill his needs.
Is there something missing in the product?
The time to find out is now, before conversion rates fall through the floor. In fact, if you’re optimizing for conversions, getting to know who your customer should be the first step of your planning.
Why is customer feedback so important?
Back in September 2014, Malaysia airlines ran a competition where it asked customers to explain, “What and where would you like to tick off on your bucket list?” The incentive: free economy-class tickets.
The marketing ploy was especially awkward and sickening because a few days ago, a plane carrying 537 passengers from the same airlines had crashed, killing everyone onboard.
Realizing the blunder, they quickly removed all links to the competition but not before the story was picked up by every media channel globally and the name of the company was maligned even more.
This is just one of the few examples where companies have failed horribly at understanding their customers.
Here’s another story.
Immediately after taking over as CEO of J.C. Penny, Ron Johnson radically changed the business from one that was based on coupons and discounts to fixed-price models.
As a result, sales started collapsing.
For Johnson, who previously headed Apple’s stores, it was difficult to understand what customers of J.C. Penny really wanted and what drove them to the store. (Source)
Accepting defeat, he finally had to restore the good ol’ coupons and deals that customers were so fond of.
Understanding what your customer wants is the key to selling more.
According to Alex Turnbull of Groove,
“As a founder, one of the most painful things in the world to hear is criticism of your baby.
Especially sharp, stinging criticism from a customer that you’ve now let down.
There’s no way around it, it still sucks when people point out where you’ve failed them.
But actively collecting and leveraging that feedback has become one of the most important drivers for continuous improvement at Groove.” (Source)
Groove reduces churn 71% by asking the right questions
Back in January 2013, the Groove team huddled around a kitchen table discussing just one thing—why did their customers leave so soon?
If the trend continued, they’d have to shut down shop soon.
They decided to get to the root cause and study the behavior of their customers. Diving into customer analytics data from Kissmetrics, they found that there were key differences between customers who left and customers who stayed.
Notably, on an average, users who stayed with Groove longer than 30 days spent around 3 minutes 18 seconds using Groove in their first session, logging in around 4.4 times a day. In stark contrast, users who quit spent only 35 seconds using Groove in their first session, logging in an average of 0.3 times per day.
The Groove team now had the data they needed. But they didn’t sit on it. They used it to try to change user behavior.
They began sending out targeted emails to the customers who logged in fewer than 2 times a day in their first 10 days.
That email got a 26% response rate, and more than 40% of the users who walked through their signup were still Groove customers after 30 days.
Similarly, if you find that most of your customers are leaving your site at a particular page, it’s time to start asking questions about what’s going wrong.
Monitoring social media is another thing you can do to gather data. Listen and assimilate what your customers say about you.
For that, you also need to find out where your customers are hanging out, which varies depending on the audience type. Fashion-savvy female shoppers may prefer to talk about their new dress on Pinterest. The more tech-savvy customer may prefer Twitter or LinkedIn.
Get to know them. Tools like BuzzBundle can come in handy for this.
Intercom.io improved churn
Akin to Groove, Intercom too noticed that there is a drop off in engagement in users who were planning to leave.
They realized that customers do not wake up one morning and decide to stop using the service. It’s a slow and gradual process and engagement flags can show what’s going on. If your product goes from everyday engagement to once-a-week engagement, it’s time to start doing something.
To counter the process, they set up automated emails which said, “We Miss You, Please Come Back.”
But they were smart about designing their campaign. Since a drop in activity could be nothing more than a user going on vacation, they took a broader approach. Intercom.io is generally used by teams of people working together, so they sent mails only when the group as a whole stopped using the service.
This ensured that they targeted the right people with their re-engagement campaigns.
How to ask for feedback
Ask close ended questions
Qualaroo is a great, virtually non-intrusive widget that you can use to gather customer feedback.
You can ask questions to know:
- The purpose of the visit: “What did you plan to achieve with the site today?”
- What stops a visitor from completing an action: “Why did you leave the purchase midway?”
- If your page is delivering on expectations: “What were you hoping to find on this page?”
- Who your customer is what he/she does: “Do you run an eCommerce site?”
Open ended questions work well too
Instead of asking the customers who had cancelled why they canceled, Groove asked them, “What made you cancel?”
It’s a subtle difference, but by asking it this way, they got a 19% response rate. While the former sounds accusatory and pins the blame on the user, the later question is filled with empathy.
Listening to customers made a million dollars for Moz
When SEOMoz rebranded itself to Moz, they hired conversion experts who changed many things, including the landing page. The new landing page was designed with customer feedback in mind.
Here’s the process they employed:
- The team talked to both paying and free-trial users. Questions to paying members included describing the things they most liked about Moz, what made them sign up and how would they describe Moz to a friend. The last question is important since it helped set the language in the new landing page.
- Trial members were asked what needed be done for them to sign up and the features they enjoyed the most.
- Even customers who had cancelled were asked why they cancelled.
- Next, they developed wireframe pages based on the feedback received and conducted usability tests, recruiting people who followed Moz on Twitter. An example is below.
- Finally, before making it live, they conducted a split test which showed a 52% increase in PRO subscribers.
They won hearts just by listening.
What to do with customer feedback?
In this competitive world, customers feel no obligation to work with companies that don’t listen to them. They flock towards the companies that provide the best service.
Moz’s landing page redesign is a fine example of what listening to customers can do for a business.
But listening to your customers and making changes based on that information isn’t enough. You then need to get back to customers with those changes.
Most companies never bother informing their customers about the changes they implemented.
Back in 2011, a young girl wrote a letter to Sainsbury asking them why their Tiger bread, which actually resembled a giraffe, was named for the tiger.
A few days later she received a reply thanking her for the letter and letting her know that they liked her suggestion, along with a discount coupon.
Eight months later, the shelves had a bread named giraffe.