Acquiring a new customer is difficult, but retaining an existing one is even more challenging. Yet, statistics show that efforts focused on retention bring way more value.
For instance, if you remember when Clubhouse was a thing you probably remember reading Titles like ClubHouse and its hockey-stick growth, Elon Musk busts clubhouse limit. Clubhouse closes an undisclosed $4B valuation Series C Round… among others. Right?
So here is the thing. They use at Clubhouse core one UX principle (or psychology insights if you prefer) to achieve that, and more importantly: to boost customer retention.
Status & Scarcity
We constantly assess how interactions influence our standing relative to others and we tend to feel more important when taking part in something exclusive.
Scarcity is the psychological bias that makes us place a higher value on things that are scarce than those in abundance. Basically, we tend to like things that are harder to obtain.— David Teodorescu
This idea actually started offline. Now it has become the norm.
And the reason it’s so effective is because it combines multiple biases into one:
- Loss aversion
- Social Proof
- Anticipated regret
Even though scarcity can be applied to unquantifiable features like quality or experiences, its effect is much more powerful when assessing measurable resources like objects or places.
The same thing happens even in other rubrics like education. Waitlist, invite-only access, live conversations, large-scale experts… Sounds fun! And exclusive. You don’t want to miss it.
Focus on User value instead of KPIs
Understanding your customers’ deepest desires, pains, and barriers will help you define their jobs-to-be-done. You can also directly ask: Why did you hire our product? What were you trying to solve? This will also help you align your long-term key business metric with your customers’ benefits.
Facebook found that if a user added 7 friends in 10 days, they were much more likely to continue to use Facebook. In Clubhouse case, the number grow up to 25 followers to stick around longer.
Without delivering value first, it is hard to convince anyone to take action. Reciprocity is a powerful persuasion technique when ethically applied.
Build a well-founded structure
It is hard to imagine a website visitor who would spend more than five minutes (usually it’s way less) trying to figure out the navigation system on your website. If you have a loaded, complex site structure, you will not retain a customer.
Take App Store, for instance:
Why does Apple make it so hard to navigate the App Store? There is such a limited selection of categories. Why can’t I search games for types of games I like rather than using only the standard game categories or having to search only across all of the apps on the store. You would think Apple has the technology for this. Maybe they just want you to buy games not really knowing what they are and not like them so you have to buy something else. This is particularly frustrating because the latest iOs is no longer compatible with most third-party sites that sell Mac games.
Here is where Gall’s law becomes your best friend.
“A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over with a working simple system.”John Gal — Author of The Systems Bible.
Having that in mind this principle is directly related to our work. Any software is a complex system that involves many different components: technologies, use cases, features, and users themselves. Creating something that complex from scratch is a difficult task. You will be making assumptions that won’t be tested until the product is live — and getting your core assumptions wrong leads to unavoidable failure. The more complex the product, the harder it is to get everything right.
Growth Referral Tactics
Another good way to improve your customer retention is using a good UX and timing to drive user action.
Let's take a look at Calm, the meditation app. It is pretty crazy how, while the app is loading, it is already delivering value using phrases such as take a breath. Easy peasy to the target: As a user, I need to relax.
Calm also uses Social proof from the start showing how many people were listened to today… You can almost feel part of a community now.
Make just enough changes at once so that users are not completely thrown off. The change here is very subtle yet powerful. It gives me enough info to feel like I am part of a larger community that motivates me to take better care of myself.UX — Weber’s Law.
When it comes to Visual Design, Calm also nailed it. For instance, with the nature-focused background, the users are going to perceive the platform as easier to use. The open space, the imagery, the relaxing sounds… You are fully immersed in a new experience wherever you could be.
Plus the one daily calm session on the home screen that changes every day acts as a small but effective variable reward, right from the start.
Those are good ways of using interactions there. Nevertheless, the most important thing here for customer retention is Rewards.
For instance, once you slowly open your eyes right after the meditation session ends, you come back to the room and you will see a screen with a daily quote and the option to share it with others. A big boost of psych right there!
That feeling of calm mixed with the rush of endorphins is hard to beat!
But that is not it yet. Calm has another UX Pro tip kept up its sleeve.
Variable Reward
We are more likely to engage in activities in which meaningful achievements are recognized.
Random rewards make powerful motivators; they seem scarce and unpredictable. We are more motivated to reach a goal with an uncertain reward.
Timing is everything, especially when you want something from your users.
The best moment to do so is when the users achieved their goal and feel like they got superpowers from your product.
That is why just after rewards, Calm ask you to rate this session. They uses this moment carefully to ask for key elements of feedback or actions that can make your business grow.
Another good example of this is Duolingo. Probably one of the best you can use to deeply understand this idea.
You can easily fall intrigued by their reward/point mechanism which uses multiple combinations to reward and motivate the users to continue with the lessons.
Duolingo’s reward mechanisms are good for motivating us not to give up. But at the same time, they also have the risk of us focusing on not losing the rewards and gaming the system, rather than genuinely focusing on learning the language properly at our own pace.
To be fair, they are doing better in this last critic.
Conclusion
Customer retention is different from customer acquisition or lead generation. It focuses on customers who have already signed up for a service or purchased a product from you.
But retaining customers is about more than just transactions — it’s about relationships.
Customers like brands that are reliable, authentic, and aware of what matters to them.— Sarah Olson
So what should you do to reach such results? You just have to employ these recommended practices. Let’s quickly recap them:
- Use in an ethical way the principle of status and scarcity to enhance your value proposition and generate a strong bond with people.
- Understand the proper practices of making a positive impact in your customer's life. KPIs are great… Focus on User value is better if you aim to sustain a long-term relationship with them.
- Rethink your website structure; it should make the navigation easier.
- Make sure the data collected is put to good use and reward to user not only for testing your app but also for kindly helping you to actually improve it. Beware of vanity metrics. Every user input should slowly make your product decisions easier.
People don't buy products: they buy a better version of themselves
Don't try to sell users on the features of your product, instead tell them how it actually improves their life.