The top 3 mistakes that cost you too many good customers

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We at Retention Design reviewed over 30 SaaS products and this is what we learned

A gun and a foot
It’s kind of like shooting yourself in the foot

Imagine for a moment that you have two options to choose from: The first — getting 1 million sign ups for your product in just 4 days. The second — working hard for 16 months to get 1 million active users. Which option would you choose?

Did you choose the first one? You must like thrills. Remember “Yo”, an app that got to a million users in just 4 days? Well, they are long gone.

Did you choose the second one? Are you ready to really work for it? The founders of Slack worked super hard for 16 months to get the teams that gave them a shot, make Slack an indispensable part of the way they collaborate, and got to a million of very active and enthusiastic users. And as you know, Slack is here to stay (This imagination session was respectfully borrowed from Des Traynor, founder of Intercom).

So why does the hard work really starts after we get the signups? Because the market is super competitive. How competitive you might ask, so competitive that trying out the product before entering a credit card is standard, and so is trying more than one product that promises to solve the problem before deciding which one to stick with. So competitive that our users’ inbox is bursting with drip-campaigns of all the products they signed up for, and getting their attention is extremely hard. So competitive that every product has an alternative, and the barrier of moving to a competitor is virtually non-existent. The bottom line, your product’s success depends on how well you can keep your customers coming back.

That’s exactly what we at Retention Design specialize in, applying lean user-centered design methods to customer retention challenges. We help our customers leverage their user data and feedback to optimize onboarding, trial-to-paid conversion and reduce churn.

After working with and analyzing over 30 different SaaS products, I bring you the 3 biggest mistakes that cause a great company with a great product to lose customers they worked hard to get. It’s not all bad though, there are tons of growth opportunities too.

Mistake #1: Putting a lot of effort into acquisition without closing the loop

Close your acquisition loop

It makes total sense that a growing company needs to figure out how to get in front of potential users. So naturally, a lot of effort is put into figuring out who are the best potential customers, what they need to hear to give your product a chance, what kind of problems they are dealing with, and how to approach them to make them curious enough to signup.

Have you done dozens of optimizations on your acquisition funnel? Did it include your onboarding flow?

Your messaging creates expectations, and if the first experience of your users with the product is not aligned with these expectations than a value gap is created, making your users lose interest pretty fast.

For example, if you promise me that in just 5 minutes I would be able to manage all my social accounts using your product, I won’t spend a half an hour on setting it up.

What you need to do to close this gap is to make sure your product delivers on your promises as soon as your users’ first experience with it. They need to see a direct path to value from the start. It’s not enough to tell them about the value, or even show them how to get to it, we need to lead them to it. It’s not always simple, especially for complex software products and products that support many different use cases. But drastically reducing the first session churn will make it worth your while.

If you’re getting hundreds or even thousands of new users to sign up every day that’s terrific. But how many of them do you lose during their first session? And how many become paying customers? If you’re just accepting an 85% churn rate as a given, you’re missing out on a huge growth opportunity.

Mistake #2: Locking the access to your most important features

An illustration of a key
Unlock your most important features

This one caught me by surprise, there are products that invite me for a free trial (no credit card required) but don’t allow me to experience value during the trial.

For example, a video creation platform that lets me go through the entire video creation process, but won’t let me download or share my first video in a standard web resolution without having to pay for it. This creates an awkward situation where a new user who’s trying out the product puts time and effort into it, and at the end of the process gets ambushed- pay or the work you’ve put in goes down the drain. This is not a situation we want to put new users in, even if we do manage to convert them, the process ends on a sour note and churn is highly likely.

The right time to limit the usage of your product is after the user has started to experience value from it. Take Typeform for example, a paid alternative to Google Forms. As a Typeform user I can create a survey, brand it, publish it and start getting responses, all before I’ve paid a single dollar. Once I reach the 100th response, which means I’m definitely getting value, only then I’m asked for payment. And by that point the decision to pay for it is a no-brainer.

Product trials where all the features are available, but the trial period is too short to experience value have the same problem. How does your users’ path to value looks like? Which features do they need to use to get there? How long did it take your already successful customers?

If you don’t know the answers to any of these questions, that’s a growth opportunity.

Mistake #3: Treating all your new users the same way

No one-size-fits-all onboarding sequences

Let me ask you, do you have an onboarding mailing sequence that you send to new users on day 1, 3 and 5 after signup? How high is your open rate? How much engagement with your app do they produce?

The issue with a one-size-fits-all onboarding sequence, even if your content is superb, is that it lacks context. When I receive an email that explains how to do something I did yesterday, or if I’m bombarded with emails about advanced feature while I’m still stuck with configuring the product, these emails have no value for me, they are just white noise in my mailbox.

Don’t be white noise, there is a variety of tools that can help you send emails in the right context, using triggers. Getting an email that explains how to do something I was just stuck on, or what is the next step I should take in the product If I lost momentum, that has value.

So how can you know what to send and when to drive your users to action? You start by mapping the steps your users need to go through to experience value from the product, and for each step prepare highly focused content with a single call to action that will help them advance to the next step. All that’s left is to integrate a solution for sending emails triggered by user behavior and watch your new user engagement skyrocket.

Let’s wrap this up optimistically

If you identified with one or more of these mistakes, you’re in good company. Yes, it means that your marketing dollars are not living up to their full potential. But it also means you have huge growth opportunities that you can start unlocking tomorrow morning.

So where to start? Go watch your new users on their first session. There is no better team activity than getting all everyone together, making popcorn and watching your users struggle. You won’t believe how many groundbreaking insights you can achieve.