Episode 7 - Becoming Embedded in Customers' Lives

Welcome to the seventh episode of the Retention Blueprint. This newsletter promises to transform your retention impact in just 5 minutes per week, providing digestible retention content that adds value every time. This week's edition focuses on how brands can become embedded in customers' lives. 

Whether you are a subscription or non-subscription brand, becoming embedded in customers' lives is key to long-term retention. Typically, this means ensuring customers regularly use your product or service. 

To understand how to motivate usage, we must understand how value is created 

Your product or service does not hold inherent value; value is realised on customers' terms, in their context. Let's bring this to life a little, taking Netflix as an example. Netflix as an app on your TV does not have any value simply sitting in the corner of the room on a TV which is not turned on. Customers realise the value in Netlfix through (a) something to occupy the kids, (b) time alone to unwind (c) a date night with their partner or (d) something else like learning or research. 

So, what matters is not your actual product or service but the value the customer gets from your solution. Understanding how value is realised is key to becoming embedded in your customers' lives. 

Understanding how value is realised 

Different qualitative and quantitative methods exist for understanding how value is realised, and it is often important to leverage both types to understand what is happening. 

One-on-one interviews, ethnographic studies, diary studies, social listening and focus groups are great qualitative ways to understand the value-creation process. Irrespective of the method chosen, you are seeking to understand your customers' context in relation to your product or service, including pain points and desires. 

Once you have this contextual understanding of the value creation process (which may vary by cohort), quantitative studies or data based on actual usage of your product or service can enable you to understand: 

• The relationship between value realisation and retention by cohort  

• Whether specific types of value realisation correlate to greater retention or churn 

• What can prompt value realisation 

• How value realisation varies by cohort by time of day, day of week or seasonality 

Becoming embedded in customers' lives

Once you have understood how value realisation occurs and how usage relates to the customer's context, you can create programs which seek to embed your solution into the lives of your customers. You can do this in 3 key ways: 

1. By creating habits 

2. By being useful beyond the product or service 

3. By aligning to values   

The first is very simply about becoming embedded in customers' lives by stimulating usage at the right time, with the right context. The second and third are about going beyond that, such that if actual usage does drop, customers feel so connected to the brand that their churn propensity reduces (to do this well it must be related to how customers realise value with your product or service).  

Creating habits 

If you understand the context in which different customers use your product or service, you can then start to stimulate usage. 

Let's take an abstract example. You may not intend to eat cookies, but if you walk into a kitchen and there are freshly made cookies on the table, most people would be inclined to eat at least one. This shows that humans make decisions when they are stimulated to do so; the environment, not motivation, triggers action (1).   

If you can understand how customers realise value, you can create communication programs or product experiences that stimulate usage and drive retention. Take a simple Netflix example: If you know a particular cohort realises value by enjoying a romantic comedy on the weekend with their partner, a Thursday rundown of the latest romantic comedy drops, with copy to reflect the customers' context, could stimulate usage. 

The key is to make things simple and obvious and interact in ways that drive action. Customers will act not because they necessarily intended to, but because they are presented with the experience.  

Being useful beyond the core product or service  

Another way to become more embedded in customers' lives is to provide value beyond what the product or service provides. The Salesforce Ohana, Dreamforce, and the content ecosystem around that brand (podcasts, blog posts, guided learning) are great examples of providing value beyond the core product. Sephora’s customer community is another. This hugely popular part of Sephora's offer allows consumers to seek make-up advice, learn about events and competitions, and try new products. Two very different approaches built on full awareness of their customers' value realisation process with their products. 

Aligning to values   

If your brand can genuinely align with the beliefs and values of your most valuable customers, this can help the brand foster a deep personal connection. Patagonia demonstrates its commitment to the environment by providing repair services in-store and even enabling customers to trade in old items for new ones (2).  Patagonia knows its customers realise the value of its products in nature and as a result make a stand for the environment.  

Final Thoughts 

Customers are born to you with a baseline Estimated Customer Lifetime value (ECLV), based on the fit of your product or service to the customer's needs. The ECLV baseline will vary based on other things in their life, which you have no control over because it is driven by how customers realise value in the context of usage of your product, essentially customer-product ‘fit’. 

By understanding how customers realise value, you can stimulate usage and drive deeper connections. This will incrementally extend customer lifetime value and grow revenues as your product or service becomes more embedded in more of your customers' lives.