This document discusses the importance of customer retention for businesses and provides strategies for improving retention rates. It notes that retention is key for long-term value creation and that a small difference in churn rates can lead to large revenue differences over time. The document then outlines a three-step model for improving retention by focusing on keeping visitors, converting visitors to customers, and motivating repeat purchases from customers. It advocates for measuring and analyzing customer behavior data, searching for trends, and testing and iterating on ideas to address pain points and improve the customer experience.

2. Retention is by definition
an ability of business to keep their customers

3. -
200
400
600
1 2 3 4 5
Ability to retain customers is the key driver
for long-term value creation
New customers: 100/mth
Average spend: 10$/mth
Firm A churn: 1%/mth
Firm B churn: 5%/mth
k USD
4% churn difference in 5 years leads to
55% lower revenues
EXAMPLE
Year
Firm A
Firm B

4. Growth without solid retention
is attempt to fill a leaky bucket

5. Often overlooked 3-step conversion model
provides good guidance for retention increase
• Visitor – Visitor
• How well do we keep our visitors?
• Visitor – Customer
• Do we convert visitors to customers?
• Customer – Customer
• Do we motivate customers to shop again?

6. Bad retention problems impair company growth,
cash-flow stability and brand image
Low growth
Churn forces company to
acquire more users to keep
base, leading to increased
cost and lower profitability
due to low LTV/CAC ratio
Low stability
Churn makes future income
less predicable, worsening
outlook and valuation of
company
Bad image
Customers leaving the
company spread negative
word around making future
acquisitions harder in the
long-run

7. Trying to fill the leaky bucket leads nowhere if
you do not remove its primary cause

8. Imagine heaven where you do not lose your
customers anymore. How can get there?
Measure and
analyze
Online firms have to
use analytics to
understand users
Search for
trends
Look for trends and
common traits
connecting groups
Test and iterate
ideas
Make experiments to
see what works best for
your company

9. You cannot manage without measuring – using a
quality analytics platform is a necessary
Measure and analyze
Google Analytics is a good start,
but does not suffice in the long-run
Look for platforms, that:
1. Are customer-centric
2. Work with real-time data
3. Enable deep dive to data
4. Allow advanced filters & views
5. Provide engagement features

10. Initially focus repeat purchases in conversion
funnel and cohort behavior
Funnels
• What are conversion paths?
• Where are the bottlenecks?
• What’s a time to conversions?
Retention cohorts
• When do customers return?
• How long customers stay?
• How it changes over time?
Identify KPIs and watch trends
1st purchase 2nd purchase 3rd purchase 4th purchase
PurchasefunnelCohortanalysis

11. Data-based hypothesis need to be systematically
A/B tested in campaigns
• Conversion funnel can be influenced
by well timed actions
• AB testing helps to find positive
changes faster and eliminate impact
of negative changes
• Hundreds of small tweaks has to be
tested, companies need to run
campaigns very effectively or they
stay in a dark age
Test and iterate ideas

12. Good analytics platforms will help you improve
both product and communication with users

13. There are two viable roads on the way to better
retention rates, good platforms will enable both
Improve product
Users might not get enough
value from your offering
Upgrade
communication
Users may not understand
how they can get value or
how big the value is
Decrease
prices
Cheaper product may make
users more tolerant to its
flaws
Road to hell
in the long-run

14. Combine robust analytics and campaign feature to
test and immediately implement your findings
• Set up company structure and
processes so you can easily
change design and functionality
without lengthy discussions
• Continuously evaluate customer
journey and behavior to identify
potential pain points
• Use A/B tests to evaluate user
preferences
• Proactively collect user feedback
Improve product

15. Campaign management tools help with quality of
communication and customer experience
• Use insights to streamline and
personalize communication
• Well timed actions with right
message delivers wow and leave
long lasting emotions
• Design campaigns that would
accompany users throughout
their journey and life-cycle
Upgrade communication

16. 2.
Track and analyze user
behavior to see trends
and pain points
1.
Set retention as your
first priority if you have
long-term ambitions
3.
Test hypothesis and use
data to align product
and communication
Way to 100% retention is long. Start today.

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