This is part 1 of my series on user retention and onboarding.
Defining Terms
Let’s define a few terms.
Customer or user retention means keeping customers or users. What does it mean to “keep” a customer or a user? It means that a person keeps using your product or service over time. However, how you define and measure that depends on the business. I touch on some measurements next.
I may use “customer” and “user” interchangeably here. For many products, they are the same but for B2B products, they are different since a customer may easily have multiple users. The retention of a customer is clearly different than the retention of one of their employees who uses your product (though they are likely correlated).
Onboarding refers to the period starting when a customer or user begins using your product until the point they are able to get some value from it. For complex products, onboarding could be a multi-week process that includes training classes. For simple products, it could be instantaneous.
SaaS stands for Software as a Service and describes both technology and business model. SaaS products are delivered remotely over the internet (i.e., there’s always some component running in the cloud) and are sold on a subscription basis. I am primarily writing about this type of product.
Measuring Retention
How do you measure retention and what do user retention problems look like? Ultimately, they are revenue problems – the company isn’t meeting financial targets. This blog series isn’t about product management, sales, or marketing, so let’s skip a bunch of analysis and assume that the marketing funnel is delivering the right number of prospects, you’re charging the right price, and you think you have product-market fit… if only users would just stick around.
In short, you’re getting enough new users but they aren’t coming back for some reason.
Depending on your revenue model, you may not see a problem right away. For example, if you sell annual subscriptions, it could take a year to realize customers are not renewing at the expected rate. So, most companies identify metrics that may indicate retention problems well before the renewal comes around. Some common ones:
- Active users
- Frequency of key actions (e.g., logging in, running reports, executing automations, posting content)
- Customer support calls
- Response rate to outreach
Retention is such an important business metric that you can be sure someone outside of the user experience team will notice problems. When that happens, how might the UX team be called on to help?
Calling User Experience
UX is an obvious choice to bring in to fix retention problems. For a strong UX team, I would expect they tackle the problem like any other starting with research and followed by an iterative design process with lots of user feedback to solve it.
However, there are still many companies that don’t operate this way and attempt to fix the problem based on assumptions and quick fixes. In this case, the UX team may be prescribed work. There are a couple interesting contexts: low retention of paying customers and low retention of trial or freemium users. Let’s look at some of the things a designer may be asked to do.
Losing Subscribers
Almost every product uses a subscription model these days. When retention of paying customers is a challenge, the UX team may be tasked with things like:
- Improving the usability of key functionality because low usage means it’s too hard to use
- Adding more help or documentation or pointers to these features
- Designing more new features to fill an assumed gap
In these situations, it’s sometimes a little clearer to everyone what the problems are since it’s easier to talk to customers than to semi-anonymous people just trying out your product. These fixes also assume that paying customers have gotten through the onboarding stage successfully to some extent. If not, requested fixes will sound a lot like the ones below.
Free Trials or Freemium Products
Many companies offer free trials or a free tier hoping people will sign up and the product will sell itself. These are challenging models to get right and to diagnose the problems when things go wrong!
Trials have their own retention metrics and, as a bonus, you can get feedback on the order of days or weeks. When trial users leave and don’t come back after their initial session or two, UX may be asked to tackle things like:
- Explaining the product’s value proposition when users first sign up
- Walking new users through the product through wizards or tooltips
- Doing more automatic setup or configuration
- Adding video explainers because people just don’t read
I like to summarize these requests as fixing the onboarding.
In part 2, I take a step back and consider some real-life examples and see just how these issues cross organizational divisions and how deep they can go.
Jay Zipursky 