During the age of Uber in Singapore, like clockwork, every Sunday a slick templatized email with Uber’s weekly voucher code appeared in my inbox. “Apply the code or miss out”, was the standard irresistible teaser.
Uber’s voucher war with Grab became prime time entertainment for consumers in the region. Each week we watched the two giants battle in the arena over vouchers, as they staked their cashflow to better one another. The Grab/Uber war in South East Asia is an interesting example of battling the competition. In such a war of attrition, one may argue that neither firm really owned or captured the consumer.
Seth Godin, an American author and businessman once said,
“Don’t find customers for your products, find products for your customers.”
The quote essentially distinguishes product/service-oriented companies on two fronts.
1) Those who design a product, and then figure out the customer to market to
2) Those who identify and embody their mission with a certain type of customer, building a product around them.
Dating is all about listening, and firms that find products for their customers capture longer lasting value. Customers generally know what they want and don’t want, so a successful relationship is based on adapting.
A company dating the modern-day man
Dollar Shave Club (DSC), a direct-to-consumer subscription service for razors and other bathroom products, knows what it means to date the customer. Aside from their viral and wildly entertaining video pitch, they were able to penetrate and compete with Gillette, which had 72% of the US market share, by putting themselves in the shoes of the customer. While Gillette was focused on adding blades and vibrating handles with a message, “the closest shave a man can get”, DSC realized that their customers just wanted a cheap, regularly supplied, and easy way to shave.
DSC’s growth and retention shows us that 50% of customers still subscribed after two years. Unilever bought DSC for US1 billion (5X expected revenue) because of their relationship with customers. DSC’s storytelling, and ability to connect with the customer by highlighting that buying overpriced razors sucked, brought them a captivated audience.
Do you have a relationship with your customer?
So, how do you know if you’re in a relationship with your customer? (The industry jargon for this is stickiness or retention). A good approach is to understand how a new or ongoing customer interacts with your platform, and if and how long they do so.
If most customers come and interact on a limited basis then disappear, there is likely a leakage issue. The more daunting task becomes to plug that leak, which is broadly answering the question - why do customers not value my offering?
With this focus, you can start to sense the magic missing in your romance. After basics are fixed, you can then blossom the relationship and think about creating value for the customer above and beyond.
Starting to plug that leak
A good way to assess retention is by analyzing the user journey. Simply put, how do customers interact and flow through your platform.
There are multiple channels to gauge customer sentiment, and several feedback loops that can be implemented, but to simplify let’s focus on two. A high-level metric’s approach and ground-level customer feedback approach.
The metric’s approach is optimal to flag big issues and trends, such as a customer being unable to execute a transaction. Couple the information with ground-level insight, and you have a much more concrete view.
Let’s say XYZ company in ride hailing uses high-level metrics to determine that customers transacted less in July (Customers are unhappy with something?). A customer survey might validate certain hunches, and perhaps provide specific guidance (Customers think rides take too long end to end). Still deeper yet, a conversation and observation of customer actions via an interview, might even answer the ‘why’ (Customers were observed to be anxious during the matching process, because the app, unlike competitors’, didn’t immediately provide a pick-up and destination arrival time).
The above mentioned three layers of investigation could in most stances help assess customer leakage and reveal insightful next steps.
Understanding a user’s experience and their friction with your platform is the basis for coming up with a solution. Fixing the experience by plugging leaks is a fundamental step towards courting the customer. Once progress is made there, a company can think about sparking that romance and delivering a higher level of value add.