13 talking points and 1 book about why everyone should care more about retention vs. churn

A few weeks ago, I discovered that basically every stat about the value of customer retention came from two twenty-year-old sources. Last night, through the GO Group, I helped host a conversation with the head of product marketing for Contentful, the FullStory VP of Sales EMEA and the heads of the UK and Germany's largest experimentation (test and learn) consultancies. While we swam in SaaS waters, our conversation explored why every business should have a retention strategy, and why it's so damn hard to report.

Here are the highlights: 

> First, if you could read one book to inform your retention strategy, pick up Hooked: How to Build Habit-Forming Products by Nir Eyal.

> Retention isn’t an abstract problem, even for hypergrowth SaaS companies, like Contentful, which just raised USD 80m in the midst of a pandemic, figuring out how to boost retention is vital. “Brands need to be digital-first to retain customers, otherwise, they will cease to exist,” said Stephanie Perozo senior product marketing manager at Contentful.

> “Focusing on short term results instead of long term growth is a management problem, ahem, 'disease.' Just because calculating customer lifetime value and retention is hard, doesn't mean you shouldn't be measuring it," said André Morys, CEO of konversionsKRAFT.

> Yes, your company should have product adoption milestones, but it should also have “proxy metrics” or “micro-moments” that can act as leading indicators on retention. These proxy indicators depend on your business. 

> When stuck: “Flip the question – why are you losing customers? Build your experimentation (and retention) program around that, ” said Stephen Pavlovich, CEO of Conversion. 

> “Move swiftly and with purpose - companies need to understand what is and is not working quicker than ever, or risk competition and consumers passing them by" said Andrew Fairbank at FullStory.

> Fighting churn is reactive and shortsighted. Building retention is proactive. While retention is the opposite of churn, you'll build a more valuable business by creating a strategy to boost retention.

> SaaS companies could look at retailers for inspiration. Contact lenses, food, and grocery delivery businesses are using well-known psychological principles to create habits and boost retention. 

> Retention is a lagging indicator. It can takes months, even years, to measure it. Because too many companies are focused on short-term growth, retention metrics and strategies are scarce.

> Too many companies, especially retailers, spend to acquire the same existing customer again and again. But in almost every industry, “the money” is earned in the second and third purchase.

> If you can grow retention, then you don’t have to spend so much on acquiring the same customer. You can directly reduce your marketing spend and the cost of customer acquisition. This is easier for SaaS companies because they can think in longer-term customer relationships. 

> You can't fight copycats or prevent competition, but you can build moats like a robust online community and partner ecosystems. Beware of playing defense, however, focus on understanding your customer and creating value for them, first and foremost.

> Don't guess but beware of a tool solution to create a retention strategy. Talk to customers that left you. Figure out what is NOT working and fix it. Be and act customer-centric. Bring in tools to help you understand reported customer behavior.

> In crisis mode, avoid knee-jerk reactions like price-cutting and handing out special incentives to prop up growth. “Focus on understanding if your customers are getting value from your solution and optimize from there.”

If you have thoughts on building a retention program, which just seems like the most valuable thing any business can and should do, then share. I'd love to hear them.