How Linkody Hacked Customer Retention

Retention, huh?

It's like interviewing for a job and getting to the final stage of interviews – just to realize that it will not happen.

We spend money to get people to our site, visitors spend eight seconds on the page and 98% will never come back.

Boy, it hurts

It is particularly painful for SaaS companies because of their long sales funnels and their high acquisition costs.

Some time ago, we decided to collect data on how to attract visitors, to move them into the funnel marketing and to make sure that they like to use our tool .

But before going into detail, let's review the optimization of the retention rate and how the data can be useful to improve it.

What is the optimization of the retention rate?

The optimization of the retention rate is the process of improving the rate of return of customers to use your services.

It sounds like something you should do, right?

In figures, it looks like this:

  1. If 100 people land on your site, an average of 2 to 3% will "convert" – that is, do what you want them to do .
    1. In our case, this is 8% of all those who do the free trial.
  2. So if we want eight people to try our free trial, we have to get 100 on our page.
  3. The retention rates of different industries are difficult to predict, but in our case we are generally able to keep these eight people for a month. Then it will happen:
    1. 4 to 5 people will unsubscribe.
    2. But 3 to 4 will try our paid plans, of which only 1 to 2 subscribers will continue to pay for more than a month.

This means that only one or two out of 100 people will continue to pay to use our services. So naturally, improving that number has become a big priority for us.

That's where retention rate optimization comes in, trying to increase your profit on every potential customer who lands on your page.

Now it's time to explain the path we took.

Analysis of behavior

First, you must try to understand the behavior of your client:

  1. Why did they leave after trying the free trial?
  2. Why did they leave after trying the paid plans?

The best way to test your hypotheses is simply by speaking to your customers via e-mail, calls, live chats or Skype calls. Everything will do.

A discreet method that we tend to use is the Hotjar survey. To set it up, just set up a small piece of code – similar to the Google Analytics setup – and set up the sequence of questions.

It looks like this: the question is triggered a few seconds after you've visited a page.

Ask simple and open questions and you'll soon understand why your customers are doing what they do.

Preparing to monitor the data

Have you ever heard the statement, "Figures do not lie" ?

Trust more numbers than you trust anyone. Period.

Google Analytics will not be able to provide information about the customer behavior you need. You will need funnel and event data tracking software to help you visualize your events.

In this case, Kissmetrics is the perfect tool for this job.

The parameters of this type of tools are what one may need to study the behavior of customers.

The setup is a bit more technical than with Google Analytics because you have to assign a tracking to each event you want to monitor. It will take time if you do not have any developers at your disposal.

What's great with the behavior analysis tools, is that they offer easy-to-program demonstration calls, in case you have trouble understanding.

Once everything is settled, let's see how we can use this data to improve your retention.

Improving the process of integration

In general, users who have tested different features of your tools may be kept longer than those who have not tried such tasks.

The design of the user integration should not be left to the intuition. Instead, be sure to adapt it to the most useful features for your users.

Once you can track events and see the impact of your integration on user retention, you can then form a set of assumptions. These hypotheses should then be tested to see if the iteration of your integration could improve your retention rate.

Analysis of the retention rate

We found that people who used a key feature of our tool had a retention rate of 20.1%.

This key feature was also the first step in our integration.

The second step was to connect our tool to Google Analytics. In the end, the people who added Analytics stayed on average 12 days, with a retention rate of 7.69%. Compare that to the retention rate of 1.69% for people who skipped this step.

We continued to explore the actions that people have taken using our tool. Interestingly, people who used the disavowal function were much more likely to return – the retention rate of this cohort for 12 days was a staggering 10.2%.

We had a 24% increase in the retention rate just by suggesting some spammer backlinks to disavow.

Once you have identified opportunities like these, your assumptions need to be tested to see if seemingly useful changes actually produce the expected results.

Imagine the impact if all your customers have the same experience as your "star" customers who get the most out of your handy features.

From a free trial to a paid plan

Once you know the precise probability of people remaining after the X action, you can assign a value to this activity.

For example, ProdPad played its 7-day free trial by giving additional "free days" for each action taken on the page.

That makes a lot of sense. The free days you give your customers are useless if they do not use them to do things that will make them stay.

You can even go further. Investigate actions that increase people's chances of getting free trials at paid plans.

Take a look at activity data that improves conversion rates between stages in your funnel. In this case, it is the customers who go from free plans to paid schemes.

We found that people who linked Google Analytics to our service were 32.5% more likely to use paid plans than those who did not.

This is what we found using the same correlation for the cohort that used our disavowal tool:

The disavowal tool is apparently so crucial to our retention rate that it more than doubles the conversion rate from free plans to pay systems.

Once you start to see this kind of data, it is then time to test to approve or disapprove your assumptions .

Improve Your Marketing Funnel

There are different ways to test your hypotheses. Here are two:

  1. Involve your software team to adjust your integration and gamify your free trial
  2. Using ads on Facebook

Obviously, the second option seems a lot easier, is not it?

Easier means faster to test and that's what we like.

After every interaction with a company, internet users are bombarded with upgrade or discount offers. Indeed, it is a shame not to help your users find their way and take the steps for which they were avoided.

Setting up Facebook to retarget ads

Facebook offers incredible retargeting capabilities, allowing you to target any specific action taken by a specific group of people.

First, state clearly the actions people can take on your site. Once you know the impact of these actions on retention, you can ensure that users use your tool to its fullest potential.

Also, I'll show you how to display ads after almost all the events that take place while people are using your tool.

First, let's start by setting up the follow-up. We will need to implement two things:

  1. A Facebook Pixel – Here's the guide that will guide you through.
  2. Event Tracking – here are the codes to implement to help track events.

Creation of public

Once this is done, we must define the specific cohorts (audiences) that we wish to guide further down the funnel.

Every event that occurs on your site is tracked by the Facebook pixel and people who fall into specific categories can view specific ads.

We know that our highest retention rate comes from people who have used the tool of disavowal. Plus, we know that there were quite a few people who did not do it.

To get started, go to Facebook's Business Manager, (1) then Ad Manager (2), and finally, click Audiences (3).

You can create cohorts or "custom audiences" (1). Next, create a custom audience based on "website traffic".

Then you will have to set the event. In this case, we want to target the people (1) who have visited in the last 30 days (2) visited the "dashboard" of Linkody (3). Specifically, those who have not used (4) tool "disavow" (5) during this period.

Make sure you exclude other groups of people. It is not necessary to advertise to people who have already done what you ask them to do.

Show ads for the good public

You can now join this cohort.

Show your customers the benefits of performing a particular action. Teach them what this feature can do for their business.

These people probably did not understand exactly how much your tool or service is worth – the exact reason why others like it so much.

A great way to educate people about this is with video guides or blog posts. Shoot a tour or write a guide explaining the benefits of this action.

Then go to (1) in the Advertising Manager (2) and create an ad of your choice.

Then select the purpose of the announcement: I suggest choosing between traffic (1), engagement (2) or conversions (3).

Next, all you have to do is select the custom audience you created before.

Done!

Now, all you have to do is check if your retention rates improve.

This will help you quickly prove or disprove the assumptions you made earlier.

Go ahead and optimize your retention

This guide can help you make the most of the money you have already paid. So why not go ahead and test it to see if you too can increase your profits.

To quickly summarize what we went through:

  1. Speak with your customers and ask questions about their biggest pain points.
  2. Follow the events on your site and analyze the retention rates to see which activities have the most apparent influence on keeping visitors.
  3. Test your assumptions about events that lead to the highest conversion rate.
  4. Create cohorts in Custom Audiences on Facebook and set up ads to educate people about your product.
  5. After about a month, check for any improvements in the retention rate, analyze this information and see what you can improve.

One thing to note is that this is only a test. In most cases, the optimization of retention will be a continuous process.

Happy optimization and let us know if you need help!

About the Author: Helvis Smoteks is an SEO-mastering, content-smithing marketer who spends his days at Linkody helping SEOs monitor their backlink data.