Mastering user retention: A startup marketer's path to growth

THE INTRODUCTION

Hello 👋 Marketing Context Fam!! Welcome to this week’s edition.

In todays edition of startup marketing deep dive we unpack a critical startup marketing process of “user retention”. We will cover:

• Why retention matters for startup marketer

• Unpack the core concepts

• Look at an example

• Role of marketer

• Resources

Did you know.. that increasing customer retention by just 5% can boost profits by a whopping 25-95%? That's right, retention is your golden ticket to startup success.
 
And guess what, we marketers have a role to ensure this happens.
 
So, buckle up as we explore how to keep your early adopters coming back for more.
 

THE CONTEXT

Why it matter?

First things first: what exactly do we mean by user retention?
 
It's simple. User retention is all about keeping those users you've worked so hard to acquire. It's not just about getting them through the door – it's about making them feel at home and want to stick around.
 
In the fast-paced world of startups, acquiring users is only half the battle. The real challenge lies in retaining those early adopters who took a chance on your product. Retention is crucial for sustainable growth and long-term success
 
For marketers, it's a chance to flex your creativity to highlight the value of your product.
 
Sounds exciting, right?

THE DEEP DIVE

Cracking the core

So what is the role of a marketer in driving retention?

In any startup, the marketer's role extends far beyond attracting new users. Your focus should be on developing long term user relationships,
 
As the startup evolves, you add new features and de prioritize older features. All these factors impact users in a way that makes retention a big challenge
 
Marketers must prioritize reducing churn. They should use retention strategies to grow.

First up, know your users inside out

To keep users, you need to understand them deeply.
 
Dive into your user data,  ask questions like,
How people use your product?. When they use it? and why they might leave?
 
But don't stop at numbers – talk to your users directly. Create a schedule and a pool of users to reach out to and talk. Keep this pool fresh with information criteria. Conduct interviews, send surveys, and create detailed user profiles.
 
This knowledge is the foundation of your retention strategy.

Understand your user’s journey

Map out the user journey from their first interaction to becoming a loyal user. Identify the key milestones along the way – their first login, when they use a core feature, or hit an "aha!" moment. Also, pinpoint where users might get stuck or lose interest. This map becomes your guide for where and how to intervene to keep users on track.

Understanding the retention landscape.

Churn is inevitable. Your goal isn't just to prevent it. You want to create an environment where users thrive and engage more with your product.
 
One of your most powerful tools in this endeavour is cohort analysis. Group users by parameters like joining date, feature usage, lifecycle stage etc.

This will reveal key patterns. They will help guide you to design a targeted intervention for different segments of users based on their usage, engagement and behaviour.

Retention toolkit

Simply put, for a startup marketer, I like to refer to something called the "Retention Toolbox" . These are ways through which marketer should focus on to drive user retention by diving the retention process into various segments:

• A solid onboarding process

• Targeted email campaigns

• Timely in-app messages

• Smart push notifications

• A rewarding loyalty program

These elements help define your intervention and engagement strategy By focusing in these areas as part of your retention strategy, you can communicate with users at the right time and drive retention across each stage of a user journey

 Leveraging data for personalization

Users expect experiences tailored to their needs and preferences. Use the data you've gathered so far to segment your users and customize their experience.
 
From personalized recommendations to targeted messaging, make each user feel your product understands their unique needs.
 
Iterate constantly and create dynamic content that evolves with the user's journey,
 
We must work with the data team. They will implement predictive models. This will help us anticipate user needs and offer solutions.

The Feedback loop: Your growth engine

Growth mindset is the most sought-after attitude, especially in startups. Every activity there must align with growth.
 
As marketers, we don't just push messages. We also gather insights. They're invaluable.

Run regular NPS surveys and act on the feedback. Create user advisory boards for deep insights into user needs and pain points. Develop a system to share user feedback with the product and development teams.

Measure, learn and improve

Retention is an ongoing process of learning and improving.
 
As marketers, it is necessary to  set up systems to track key retention metrics regularly.
 
Analyse this data to understand what's working and what does not.
 
Don't be afraid to experiment, especially if you're driving retention at a startup. A/B test your emails, in-app messages, and even features. Share your insights with the product team. It will help improve the product and keep users coming back.
 

Analysing your impact

With all the effort put in so far, now is the time to measure
 
To prove the value of your retention efforts, focus on the impact areas.

The two impact areas that I constantly measure at my startup are,

• Is Net Dollar Retention (NDR) showing expansion within your existing user base

• What is the status on feature adoption rate? Track how our campaigns impact the use of key features

(Note: Retention efforts are ongoing. New users keep joining. As your product evolves and users mature, you'll create more use cases. So, continue to measure your retention efforts.)
 
Remember, your goal is to show not just that users are staying, but that they're growing with your product.

Position yourself as a retention catalyst

Earlier we talked about micro elements to focus on, as marketer, this focus will help you not just retaining users, but also in building a thriving user base that drives your startup's growth.

A quick tip: Marketers who master these retention micro- strategies, becomes indispensable 😄 .

You're not just filling the top of the funnel. You want every user to be a long-term, high-value member of your product ecosystem.  

Every interaction can reinforce value, deepen engagement, and turn users into advocates. Mastering these micro-elements will do two things. First, you'll retain users. Second, you'll build a foundation for exponential growth.

Collaboration is key

Remember, retention isn't just a marketing task – it's a company-wide effort. Work closely with other teams:

• Product: Use retention data to inform feature development

• Customer Support: Address pain points that might cause users to leave

• Sales: Ensure they're setting the right expectations from the start

By promoting retention, you'll create a culture of long-term user satisfaction.

Challenges that impact retention in early startups

Feature overload: A common issue with most startups is that we don’t believe in the principle of less is more. And our own fear and eagerness to impress a user, we tend to go overboard.
As marketer we need to act as gatekeepers and ensure that we,

• Implement progressive feature revelation

• Provide contextual help and tooltips

• Create user onboarding paths based on specific goals or use cases

Lack of engagement & support: Another issue. We must remember that constant engagement and support are critical in startups. Having worked hard to get a user to your product then losing them due to lack of engagement is a crime.

• Implement gamification elements to encourage regular use

• Create cadence and send timely, relevant push notifications or emails

• Build a comprehensive knowledge base and FAQ section

• Implement a customer feedback loop to continuously improve support quality

STRATEGIES IN ACTION

Pleo's retention strategy

Pleo, a Danish fintech startup, offers smart company cards and expense management solutions. Their retention strategy focuses on simplicity and executing core elements effectively.

Challenge:

Pleo aimed to retain customers in the competitive fintech space while scaling quickly. They needed to ensure users fully adopted their product and continued to see value in it over time.

Retention campaign strategy:

Pleo's retention strategy was focused on 5 key pillars

1. Solid onboarding

2. Targeted communication ( emails)

3. In app messaging to active users

4. Smart push notification

5. Loyalty program

Impact:

Pleo's retention strategy drove growth by keeping businesses engaged with its platform. It does this by giving a great user experience, by communicating, and by rewarding loyalty. Therefor,

Achieved a 92% annual customer retention rate

35% increase in user engagement within three months of implementing the new in-app messaging strategy

40% increase in average customer lifetime value

25% increase in new customer acquisitions through the referral program
 

MARKETING MINDSET MOMENT

Role of a marketer: Shifting gears from acquisition to retention

First, let's reset our mindset.

While bringing in new users is exciting, keeping them around is where the real magic happens.

Retention isn't just about numbers. It's about building lasting relationships with your users. It's more cost-effective and leads to organic growth through word-of-mouth. Remember, a happy, long-term user is your best marketer

RESOURCES ON SPOTLIGHT

Resources:

• Hooked: How to Build Habit-Forming Products" by Nir Eyal (Link)

• "Retention Point: The Single Biggest Secret to Membership and Subscription Growth" by Robert Skrob (Link)

• "Retention: The Silent Killer" by Brian Balfour (Reforge Growth Series) (Link)