How Your Job Effects Customer Churn

With company’s growing larger and larger and employee skillsets becoming more and more specialized, it is easy to see a workforce behind a product numbering in the hundreds or even thousands.  Yet, the customer might only come into contact with one, two, or three people that have customer facing jobs in sales, customer service and/or technical support.

But, just because you get to sit in a nice cushy office behind the scenes does not mean that your job will not effect the customer’s decision to leave your product for a competitor or alternatve solution.

If you are in Finance, make sure you do the math correctly when you calculate a customer’s bill.

If you are in Product Design, make sure you go out of your way to make sure the product is reliable, well designed and fits their needs.

If you are in Factilities, make sure you keep those bathrooms clean, those snacks well stocked and the conference rooms at the right temperature to keep company moral at high levels.

If you are in Security, smile and take pride in creating a safe and secure work environment for all employees.

You see, a product is not one person, one funtion, or one thing.  A product is team effort of functions that create a positive customer experience that prevents churn.  One part of that team that drops the ball, puts the customer experience at risk and therefore drive churn.  

How clean are your company’s conference rooms?   Are you thinking of the customer and their experience at every decision?

Interesting in reading more on customer churn, read my previous post.

How to Report and Understand Customer Churn

Understanding customer churn is essential for every SaaS, IaaS, or service company doing business in any marketplace today.   Too often companies will be so focused on what is coming in through the marketing facet that they forget to check the flow of water going down the drain.  Your sink full of customers might be draining slowly and along with it, your company’s future.

Even the smallest companies will benefit from tracking customer churn every month.  Reporting around churn will give you a lagging indicator which can tell you a lot about your company, your product, and your policies.

1) Do you have access and/or the ability to gather information on why your customers leave? 

If not, consider an exit survey and follow-up courtesy call to the customer.  Also consider setting up a data warehouse to house the information you gather so it may be linked back to customer records, usage, and campaign data.

2) Are your cancellation reasons aligned toward the company’s structure? 

Reasons/categories should be aligned along company owned churned (something your company did to cause churn) or customer owned churn (the customer churned because of something they own and is not the company’s fault).  In addition, each category should represent a function in the company. 

Price too high? Your CRM department should own that one. 

Reliability Issues? Your Product/Engineering department should be held responsible for those.

3) How do you report your churn?  Is it a single chart?  A dashboard? What time frame do you use to report it (quarter or monthly)? 

Your churn report should contain multiple views of the same data that let decision makers understand: a) who is churning, b) why they are churning, c)  trends over time, and d) the general mood of the customer as they leave (do they hate you or are they going to miss you)?

4) Is the data accessible to everyone who plays a role in decision making?  How do you know they review the data? 

Setup a recurring monthly meeting a few days after the final report is published with the stakeholders and make sure everyone is on the same page as to what the report says and what action items there. 

5) Does your churn report look better than it works?  Does it have more animation than the last banner ad you saw?

A well designed churn report is not defined by animation, color palletes or the number of charts.  A well designed churn report was built from the ground up with a firm understanding of how your business operates, a solid method of customer engagement, and well defined data viewpoints that help the decision maker understand what is dripping down the drain at a glance.

The more you can understand churn and help the decision makers understand churn, the better off your service company will be.  In fact, if you can gather enough good data, you can start predicting churn with a degree accuracy, preventing a customer from churning before it even happens.  How much better could that be?

So, what are you waiting for?  Get down and dirty with churn, get your plumbing tools and start making sure that drain doesn’t drip any more than it needs to.

Read more of my content on: Customer Experience

How Much Space Do You Really Need?

I live in the Tea Fire burn area of Santa Barbara.  In November 2008, a devastating wildfire burned more than 200 homes to the ground.  While the cause of the fire is undetermined, many residents have begun the rebuilding process.  The house that I rent miraculously survived, giving me a front row seat of reconstruction. 

What shocks me most is the rather ambitious size of the homes being rebuilt.  Our neighborhood was a quaint middle class neighborhood with decent size houses and middle class character.  However, the homes being rebuilt are of upper middle class character and are estimated to be 1.5 times greater in size.   I am utterly shocked at the “mansions” my neighbors are building. 

Building such large homes seems counter productive to the environmental image that Santa Barbara believes it has.  Here are just a few of the concepts that I struggle with.

  1. Large homes, occupy a larger footprint than smaller homes, meaning there is less “open” space around the home.
  2. Less open space means less room for environmentally clensing plants and/or gardening.
  3. Such large houses require a large amount of material to be gathered and assembled in one place.  A high material to person ratio for a house can’t be environmentally positive.
  4. The larger the house, the more HVAC and resources it takes to maintain it.  Granted HVAC systems are highly efficient these days, but seriously, heating large spaces are more environmentally unfriendly than heating smaller spaces. 

How much space do you really need?

Maybe it is just me and my view of what housing should be.  For me, a small, well designed house of sufficient size for the family on a large plot of land surrounded by nature and sustainable, edible gardens are the future of a sustainable America.   Sure this is highly unlikely to ever materialize given our global, corporate driven, profit and image means everything society.  

So, putting emotions aside, how much space do you really need to live each day?  Is that 7,000 square foot house for you and the partner really needed?   Just asking… 

Customers HATE Jumping Hurdles

Hudles are great when placed around a track.  They provide a challenge to runners to get over them repeatedly as they run toward the finish.  Hurdles provide the challenge.

Challenging hurdles lose their value when they leave the track.  When your customer is running the track that your product provides and they come across a hurdle, they swear, they stop, they become angry, and they start to look at the track next door that doesn’t have any hurdles.  Your customers HATE jumping over hurdles to:

1) Use your product (poorly designed interface)

2) Interact with your company (not providing a direct telephone number on your Contact Us page)

3) Claim rewards (remember those annoying mail-in rebates that require the reciept in triplicate and a form with BLUE ink only?)

4) Get rid of your product (not allowing your customer to cancel easily is a red-flag)

Hurdles can be seen in your data.  Whether you track conversion rates on your website or survey customers regularly, hurdles are patterns that stand out.

Do you look at data? Do you talk to your customers?

How many hurdles does your product have? 

Do you even know if your product has hurdles on its track? 

If you don’t know, found out immediately!

Social Game Developers Use Tutorials to Get Crucial Early Retention – Mixpanel – Analytics for startups

This post was originally written by Tim Trefren on InsideSocialGames.

Because a range of our customers are social game developers, we can get a high-level look at trends they’re seeing in their Facebook applications. One of the big trends we’re seeing is that games are using tutorials to generate strong retention among new users. A related trend is that this initial retention is critical to the health of your game, in the weeks following launch. Here’s a closer look.

Impressive Results From Tutorials

One thing we’re seeing succeed is the tutorial-based signup process. A well-crafted tutorial removes all the ambiguity out of getting started and helps teach a new user how to play the game.

If you’re not familiar with this technique, the FarmVille signup process is a good example. FarmVille explicitly teaches you how to harvest, plow, and plant seeds with a 3-step tutorial.

Now that you’re familiar with the concept, let’s take a look at the data I’ve compiled from a number of games.

By The Numbers

The most impressive finding of this analysis is that individual steps in a tutorial convert at over 90% on average. Meaning, once a user has started a tutorial, they have a greater than 90% chance of continuing at each step.

This doesn’t include the first step, however – as you might expect, it’s harder to get users to start a tutorial than it is to get them to complete additional steps.

First step conversion rate: 71.4%
Additional step conversion rate: 95.06%
Overall completion rate: 37.9%

Many companies are now utilizing the tutorial technique, and it clearly deserves its popularity. Conversion rates of 95% are practically unheard of, but tutorials appear to be delivering these results.

An Interesting Trend in Visitor Retention

Another thing I noticed was a strong trend in retention behavior. There are some remarkable similarities in the *pattern* of visitor retention across games, despite the differences in the actual numbers.

Before I go any further, here’s a quick overview of the concept: Visitor retention is the percentage of visitors who come back and interact with an application after their first visit.

Visitors are chunked into groups—also known as ‘cohorts’—and then analyzed based on the the behavior of the group as a whole. The most common method is to group by visit date. For example, one group might consist of all the visitors who were first seen in the week starting May 3rd.

Once you have grouped your visitors, you can track them over the following weeks and see how many from each cohort return to the site.

Now let’s look at some actual retention numbers for a variety of different games. To compile this data, I first took a sample of the different social games using our service. Then I looked at the average week-over-week retention for each game.

Here’s a graph of the average weekly retention rates for the different games:

You can see that on the surface, the retention numbers are pretty different – some of these games have long-term retention rates close to 50%, while others rapidly approach 0%.

However, the interesting thing to note is that while the absolute retention rates are different, the pattern of retention is very similar across games. They all have a massive dropoff after the first week, with relatively flat retention in the following weeks. If you take a closer look, the ‘flat’ parts of the graph run nearly parallel, meaning they have very similar weekly conversion rates.

We can take a closer look by calculating the “conversion rate” – (e.g. week 3 divided by week 2, etc) between adjacent weeks. Here’s a graph with this transformation:

See a pattern? At the first point on the x-axis (Week 0-1), we can see that the initial conversion rate ranged from 1.76% on the low end to 62.83% on the high end. The interesting part comes later, though – no matter what the initial conversion rate between weeks 0 and 1, the following weeks convert at close to 80% across all of the games.

Basically, this means that once you’ve had a user for at least a week, they have an 80% chance of coming back each following week.

This suggests that your initial retention rate is critical, because once you’ve retained users for a week you are likely to keep them for quite a while. This behavior also raises another question: why do almost all of the games in our sample exhibit this behavior? Is it possible that this is just how social games work – retained users have an 80 – 95% chance of returning each week? If so, this could mean that the only thing you have control over is the initial retention rate. Time to write and polish your tutorials.

Fascinating case study of how to improve those critical early retention rates!

Approaches to Life: Quantity

As one experiences life, there are many buckets or personas that life sceintists can place people into.  The buckets include efficient precision (those who plan carefully), sponteneity (people who live in the moment only), and quantity (those who are more concerned with sheer volume than quality).

There are people that require many years of observation to place them into the correct persona.  On the other hand, some people only take seconds and leave behind many clues.  Take the photos below:

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Clearly this individual used A LOT of duct tape and after watching the recent Mythbusters Duct Tape Hour, I couldn’t let this one go unnoticed.  If you notice in the second picture, the lack of precision in regards to the placement of the mirror, precision and planning probably was not used in this project.   While the end is functional, the quantity approach definitely fits here.

Cheers!