Attract, Convert and Retain

27 Nov 2006

You see a lot of Startups talking about technology, innovation, features, mashups and what not. But how many CEOs you see talking about strategies to attract, convert and retain their customers?

The “build-it-and-they-will-come” strategy is a bit flawed on a noisy Web 2.0 world. There are too many people building, and people cannot go everywhere.

Let’s assume for now that you’ve built a product that users want (as opposed to a single feature, or something that doesn’t solve any real world problem), how do you attract, convert and retain users?

Attract

Attracting means getting users to visit your website. The easiest and most expensive way of doing that is through ads. Just allocate $1 million for you Google AdWords campaign and you are guaranteed to attract a couple million visitors. The cheapest way to attract users is through PR or word-of-mouth, both are very effective.

Initially, you want to diversify your strategy to attract visitors to your site. The reason for it is to be able to measure what works and what doesn’t. If you only rely in PR, you won’t know the effectiveness of other means of attracting customers.

Here is a list of ways to attract visitors to your site:

1. Invite friends and family (people forget to do that);
2. Ask them to invite other people;
3. Find out your most active users, engage them and ask them to blog about your company and invite other people;
4. Run Ads on Google, Yahoo, MSN and other search engines (tiny budget, don’t overspend until you can measure success).
5. E-mail newsletter. Use every opportunity that you email users to get them to invite other people to sign up.
6. Press Release — get the right reporter/blog to write about your company. If you have a site about horses, you probably don’t care too much about being listed on TechCrunch.
7. Direct Mail: This is very expensive, but if you can get the “perfect” mailing list it might be worth it.
8. TV/Print/Radio ads: The problem with those is that it is hard to measure it. If you cannot see if the campaign was worth it, don’t do it.
9. Now, the holy grail: Make your product viral. Let users invite other users, let visitors easily add their email and their friends email, make users want to share the links of your site. Think YouTube, MSN Messenger, MySpace.

The success of a marketing campaign to attract users is three-fold: measure it, measure it and measure it.

Convert

Having visitors converted into users is hard work. The easiest way to convert a visitor is by not having any sign up process (like YouTube, CNN.com). The problem with that is that you won’t know who they are.

You can also have a ultra-simple sign up process and get lots of users signing up, but more important than that you want users to use the product. About 10% of Sampa users sign up but never use the product!

Conversion rates is very dependent on your service. If you think you’ll get 20% of visitors signing up to try the product you are fataly mistaken. Sampa has an insanely high conversion rate: 8%. When we talk to investors or people “in-the-know”, their jaws drop and they immediately think we are bulls**ting them. We are not, we have consistent data tha proves data over the past 6 months.

You should be realist and expect a conversion rate between 1–5%. Anything above that will be bonus.

Here is how to improve your conversion:

1. Don’t attract a general audience. The easiest way to drop your conversion rate to the floor is to bring a bunch of people that don’t care about your service. That is why appearing on TechCrunch or GigaOm might not be that great.
2. Don’t mislead on your ads.
3. On the landing page (where ads will lead to), which is usually the homepage:
4. Keep it clean and to the point;
5. Add customers’ accolades (remember to put the customer name, ask for authorization).
6. Make it clear what the benefits are (remember to differentiate between benefits and features. Benefit = Share pictures with family, Feature = Upload pictures).
7. Link to a page with the feature list (some users care about that)
8. Clearly indicates a button to sign up (or insert the sign up form)
9. On the sign up form or forms:
10. Only the basic info is mandatory (name, email, password)
11. Don’t ask more than the necessary to gather basic marketing information and make it optional.
12. Never more than 3 steps to sign up.

I’m always amazed at how poorly some services are designed. Sometimes a friend times me to check out X. When I get to their homepage I can’t figure out what they do. In other cases, I can’t figure out how to get going. It actually happened when I used the Google Reader the first time (six months ago). I thought I was stupid because I couldn’t find how to add a feed.

Retain

The way I see there are three stages to retain an user: after they sign up, after they tried the product and while they are active users of the product.

As I said before, Sampa loses 10% of its customers after they sign up but before they start using the product. Many things lead to that: User misspelled their email address, so they never got the confirmation email. Users sign up because they sign up to everything, maybe some day they will try it (the “tire kickers”). Users sign up, but later become busy and forget about it.

Quick list of how to retain users just after they sign up:

1. Ask them to enter their email address twice (verify your email) or display a page showing them the data that the entered and an opportunity to click back;
2. If they don’t sign in to try the product, send them a reminder one week later;
3. The “Welcome email” is the opportunity to sell the product again — This must be in terms of benefits, not features.

After they sign in, used the product a few times, you must make sure that they stick to it. That they won’t try the competitor or give up because they are frustrated. This is the hardest part (IMHO) about retaining a customer.

A few things you can do are:

1. Give them early wins, like, let them upload something, choose something, or add some sample content based on some of their initial form responses.
2. Minimize the learning curve for the basic stuff, this is, basic tasks should be just 1-click away and have a 1-step process.
3. Send them a one week and one month anniversary emails;
4. Provide simple tutorials / “how-to”.
5. Provide an easy communication channel between them and the support team.
6. Provide multiples support channels: Email, forms, newsgroups, KB search, phone, etc.
7. Let them see what others are doing / have done.
8. Let them know of how much more can be accomplished with a little more knowledge of the product.
9. Let them invite friends to see what they’ve done;

Finally, you’ve got an active customer, which on our definition is somebody that came back a month after they sign up and continued to use the system ever since (even if just a couple of times). This is your real customer. He expects a lot from your service, and, you might not know but he is the best source of information for product improvements, usability issues and bringing other customers to the system.

Retaining existing customers is crucial to your survival. The best way to retain existing customers is to delight and engage them.

Here is a very, very, very short list of things that you can do to retain your existing active customers:

1. Let them know of new features first (when they find out about new features through the press/blogs you missed an opportunity to make them feel special).
2. Always ask them for feedback;
3. Give them perks based on how long they are your customers;
4. Give them perks based on how often/much they use your service;

This list can go on and on.

As important as it is to retain your valuable customers, it is also important to know when to let them go. A customer that costs you ten times more than he is generating in revenue is probably not worth keeping. Learn a respectful way of telling him it is time to go. But that is another email post.

Now, tell me, what is your strategy to attract, convert and retain customers?

More Articles