Episode 20 - The Retention Hierarchy of Needs

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📰 Top Story: Retention Hierarchy of Needs 

This newsletter reaches a wide spectrum of seniority within retention, from the C-suite to VPs, Directors, and Department Heads to managers, executives, and newcomers to retention.  

Each level of seniority and role type can influence different dimensions of the retention hierarchy of needs. 

Core Value Proposition 

This is what you offer and at what price to who. Factors that influence this include: 

• Product / Service

• How you craft your offer inc. pricing tiers  

• Competitive offerings & their prices 

• TAM 

• Brand

• Organisational culture - are you short-term profit focussed or customer-first 

Previous newsletters that cover topics in this space include: 

• Episode 2: Customer Love = Growth 

• Episode 13: How Improving Retention Can Double Profits 

• Episode 14: Retention is critical because your target market is finite 

Who You Attract 

How you market and who you market to affects customer retention. 

Run a ton of $1 free trials; your customers are unlikely to be sticky (but see what L’Equipe did to tackle this in today’s case study).

Run a blended CAC; you are likely to over-index on low-value subscribers. 

Provide an attractive discount on annual versus monthly subscriptions, and you will acquire more loyal customers for higher CLVs. 

I covered the Retention - Acquisition Connection in episode 5 and we will cover offers, pricing and free trials soon.  

How You Manage Relationships At Moments of Truth 

At the top of the pyramid is how you manage customer relationships at critical moments of truth. 

Moments of truth are: 

• First usage

• Sign up journeys 

• Onboarding programs 

• How you create habit 

• Handling usage declines 

• ARPU enrichment journeys 

• Managing the service experience/service issues 

• Handling cancellation journeys 

All moments of truth are influenced by 

• Journeys you build

• Execution tactics 

• How you leverage data & personalisation 

• Behavioural science 

• How you leverage AI 

Several previous episodes have covered these areas; we will expand on them in future episodes.  

Why this matters 

This matters because retention is complex.

Retention is the sum of all customer interactions.

To effectively manage retention, leaders must assign responsibilities to their team members for different components of the retention hierarchy of needs, develop RACIs for each, and track performance KPIs relevant to each element. 

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💼 CASE STUDY: L’Équipe

_{Together with Poool}

Limiting churn when increasing the price from a highly discounted subscription offer

Highly discounted subscription offers are great for acquiring new customers, but they can have poor retention rates and sometimes not pay back. 

L'Equipe (which has 1.5 billion page views a month) sold thousands of subscriptions at €2.24 a month (instead of €12) in celebration of the 100-day run-up to the Paris Olympics.

To limit subscriber loss, L’Equipe deployed five tactics focused on driving subscribers to specific newsletters, downloading the mobile app, announcing new content, inviting subscribers to join L’Equipe’s Whatsapp group and warning subscribers that they would soon lose access to crucial content.  To do this, they used four simple Poool Engage widgets:

Action #1: Show on-site banners with a 1-click newsletter subscription

Display settings:

Format:

• Sticky banner, top of the screen

• One-click newsletter subscription

• “Close” option available

Display rules:

• Show 10 times maximum

• Only on article pages

• Both web mobile & desktop

Action #2: Suggest mobile app download

Display settings:

Format:

• Sticky banner, bottom of screen

• Redirect to Apple or Android app store

• “Ignore” option available

Display rules:

• Capped to 3 times max every 7 days

• Only on article pages

• Only on web mobile

Action #3: Announce which content is about to be released

Display settings:

Format:

• Sticky banner, top of screen

• Foldable

• No redirection, no link

Display rules:

• Capped to once per day

• Show 10 times maximum

• Only on home pages

Action #4: Invite readers to join their WhatsApp channel

Because the team at L'Équipe knows that their WhatsApp members will stay subscribed for longer, they launched a pop-in promoting it, for subscribers only.

Display settings:

Format:

• Toaster

• “Close” option available

Display rules:

• Show once per week

• Only on article pages

• Only on web mobile

Action #5: Warn churned users that they soon won't have access to this content

Display settings

Format:

• Sticky banner, bottom of screen

• “Close” option available

Display rules:

• Show 10 times maximum

• Only on articles pages

• Both web mobile & desktop

Initially built for at-risk subscribers, these strategies have been progressively deployed for all cohorts.

Find out more about Poool here.

🤖 AI Feature

Last week, I met with Martech Guru, Frans Riemersma, aka 'the King of Martech evaluations' and leader of the Martech Tribe, to discuss all things Martech and AI. 

Tom: How did you start the Martech tribe? 

Frans: Five or six years ago, I started collecting data on the market because I didn't understand it. Before long, 150 people in Europe and beyond helped me with country information, landscapes, etc. 

Tom: How do you keep up with the 14,000 tech vendors in the market? 

Frans: The 150 volunteers became 500, so that helps. And then there is, of course, the beauty and the joy of machine learning and scraping.  

Tom: How is AI going to impact Martech? 

Frans: AI agents in the background, completing tasks for you, with software being created on the fly in the back end and as a user you don't even know. AI Agents building stuff for you to complete tasks.   

Tom: What are the different categories of Generative AI in Martech?  

Frans: One is Indie Gen AI tools. Do one trick really well e.g. remove an image background. Do some lead qualification, look for look-a-likes. Second is incumbent tools embedding GenAI. The third category is what I call the disruptors. ChatSpot from Hubspot is an example of where this could be going. It's reinventing the entire marketing automation concept with one chat box and bot. You can ask your questions, and it delivers outcomes, like telling you how many contacts you have, adding contacts, conducting prospecting, creating reports, creating marketing content and more. Everything you need is delivered via chat. 

Tom: How long will it take to see entire retention marketing journeys created via a chat prompt? 

Frans: My guess is that it will still take some years. Technology is making big leaps, but the limiter is us humans. We're always the bottleneck. We have to learn. We're still apprentices, figuring out how to master GenAI.

Until next week,

Tom

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Do you need help with Customer Retention?

When you are ready, contact me to discuss consulting, my fast-track retention accelerator, courses, and training. Or if you are interested in sponsoring this newsletter, get in touch via [email protected]