Growth 101: Strategies for Customer Retention & User Engagement in the New Digital Age

Turns out we didn’t know what living truly digital lives felt like after all. We do now—and with at-home entertainment, online shopping, and video conferencing products now shifting into top speed, most companies face an immediate challenge: behave like digital natives or become fully forgotten.

Visual Capitalist is reporting that video conference apps alone enjoyed a 627% increase in downloads in Q1 of 2020, more than doubling total active users, while people overall spent 20% more time using apps in the same time period compared to last year, with $23 billion spent in app stores--the highest of all time.

On the flip side, industries many may have taken for granted before are being hit hard, and we are all feeling the effects. Food businesses all across the country have been shuttered, forcing owners to make massive pivots based on the strong demand for digital and delivery as we all prepare for the next wave of how we will live our lives.

wingstop-mobile-sales

Source: Wingstop

Wingstop, for example, built out and refined its mobile ordering infrastructure and delivery presence, and was able to quickly adjust to a delivery-takeout model, resulting in a reported 9.9% comps increase at the end of the quarter (March 28).

It’s never been as important as it is now to work on your digital products. It’s no secret that the most critical indicator of your current and future success will be how capable you are of retaining users--we talked about customer retention just last week. But how do you do it? You’ve got to think about every interaction you have with your potential customer as a transaction first--what are you giving them, and what are they giving back in return?

At the core, there are three main “engagement plays” that any company can run.

  • Attention
    • Maximize the user’s time on your platform by providing engaging entertainment, whether it’s streaming video (Netflix), gaming (Nintendo), social interaction (Facebook), discussion (Reddit), or news (Washington Post). In exchange, receive up-front subscription revenue, pageview/advertising revenue, and/or add-on revenue, and sometimes all three.
  • eCommerce
    • Maximize user purchases through your platform by offering decisive purchasing advice and easy shopping opportunities regardless of industry, from the likes of direct sale big-box type retailers (Amazon, Wal-Mart, Target) to restaurants (McDonald’s, Taco Bell) to affiliate-link based purchase suggestion outlets or facilitation platforms (Wirecutter, Shopify). As a result, benefit from direct or residual revenue payments for goods.
  • Productivity
    • Maximize the user’s reliance on your platform to complete business or productivity related tasks such as P2P communication (Zoom, Slack, Meet), task tracking (Trello, Basecamp), file storage (OneDrive, Dropbox), file/document creation (Office, Creative Cloud), or specialized industry tools. Consequently, build revenue through enterprise subscriptions, recurring membership payments, tier-based storage access costs.

engagement-plays

As you look through these three plays, have you identified which one you’re running as a company? While all three can be important, specializing in one thing will allow you to more concretely track your relative success or failure.

So what’s success look like? You need the right North Star metric to know.

If you’re running the eCommerce play, a metric like “time spent on site” that might be relevant to an Attention play user isn’t important--you want purchases, not constant viewers. Conversely, if you’re in productivity play mode, both time spent and purchases are important--but it’s building reliance on the tool that leads to those, so you need a metric to let you know how essential your application is to your user.

For a theoretical example of what might seem like a logical and representative North Star metric that actually isn’t, let’s look to Facebook. Everyone remembers their initial thrill of having other users drop “likes” or comments on their posts, and to an even more exclusive degree, reveling in the glow of having other users share their content.

But if Facebook were to only focus on increasing those metrics, they’d become so ubiquitous as to become uninteresting to users, reducing motivation to return to check to see if they got any. Instead, they focus on increasing the number of Daily Active Users through suggested posts, content from top friends, “buzzworthy” content, and other points of interest, knowing that more activity, and the resulting likes, comments, and shares, will naturally result.

You can probably see what we’re getting at. Think about your ideal end result, and choose a metric that reflects it. Ask yourself these questions.

  1. Think about what you provide as a company. Are you running the right engagement play for your business?
  2. What’s your North Star metric, the main piece of data you’ll use to measure whether your Engagement Play is successful?
  3. Does what you’re giving to the user align with what you’re getting, or what you need to get?

Much like obtaining a competitive advantage from a clearly defined culture, choosing and understanding the right engagement play and tracking it with your best North Star metric allows your company to focus and understand exactly what you’re doing and why you’re doing it at a high level.

Clarifying and understanding your transaction and offering appreciable value to your customers will maximize your user retention--and ensure you’re one of the brands users will return to in an increasingly crowded digital economy.