7. Hacking Retention

Question 1

What is the primary purpose of business according to Peter Drucker?

Answer 1

To create and keep a customer.

Question 2

What is customer churn?

Answer 2

The rate of loss of new users.

Question 3

How does a 5% increase in customer retention rates affect profits?

Answer 3

Increases profits by 25 to 95 percent.

Question 4

What is the significance of high customer retention?

Answer 4

It is a deciding factor in achieving strong profitability.

Question 5

What are the costs associated with acquiring new customers?

Answer 5

It takes significant money to acquire a new customer, especially with rising advertising costs.

Question 6

What percentage of customers returned for a second cleaning at Homejoy?

Answer 6

Only 15 to 20 percent.

Question 7

What is Amazon Prime known for in relation to customer retention?

Answer 7

It has a high retention rate, with 73% of free trial subscribers converting to paying subscribers.

Question 8

What is the renewal rate for Amazon Prime subscribers heading into their third year?

Answer 8

96 percent.

Question 9

What effect does high retention have on revenue?

Answer 9

It increases opportunities to earn more revenue from upselling and renewals.

Question 10

What is the relationship between retention and advertising revenue?

Answer 10

Higher retention can lead to more advertising revenue as advertisers want to target a loyal customer base.

Question 11

What is growth hacking?

Answer 11

A method to quickly identify and test strategies to improve customer retention.

Question 12

What are the three phases of retention according to Brian Balfour?

Answer 12

Initial, medium, and long-term.

Question 13

What defines the initial retention period?

Answer 13

The critical time during which a new user decides to keep using a product or goes dormant.

Question 14

What is the key factor for retaining customers during the initial retention phase?

Answer 14

Providing high value during the initial use.

Question 15

What is the core mission for growth teams during the medium retention phase?

Answer 15

To make using a product a habit.

Question 16

True or False: Companies can assume customers will continue to engage without effort.

Answer 16

False.

Question 17

What is a stable retention curve indicative of?

Answer 17

A measure of product/market fit.

Question 18

What does the ‘Smile Graph’ represent in relation to Evernote?

Answer 18

The longer users engage with Evernote, the more likely they are to continue using it.

Question 19

Fill in the blank: A company must continuously work to improve its _______.

Answer 19

[offerings for customers].

Question 20

What happens when a company fails to communicate optimally with customers?

Answer 20

Customers may defect over time.

Question 21

What is the impact of customer loyalty on word of mouth and viral marketing?

Answer 21

Higher retention leads to stronger results from both.

Question 22

What does it mean to have achieved product/market fit?

Answer 22

A stable retention curve.

Question 23

What is the relationship between initial retention and long-term customer loyalty?

Answer 23

Higher initial retention increases the likelihood of long-term loyalty.

Question 24

What is the core mission for growth teams in retaining users in the midterm phase?

Answer 24

To make using a product a habit.

Question 25

What is the goal of habit formation in product usage?

Answer 25

To create a sense of satisfaction that users incorporate the product into their routine.

Question 26

Give an example of a habitual product user.

Answer 26

A Snapchat user who constantly checks friends’ stories during breakfast and dinner.

Question 27

What is essential for long-term user retention?

Answer 27

To assure that a product keeps offering customers more value.

Question 28

What must teams experiment with to improve retention?

Answer 28

Ways to keep improving the product and determine timing for enhancements.

Question 29

What is a key metric for measuring retention in e-commerce?

Answer 29

The repurchase rate of customers.

Question 30

How often do grocery app users typically shop?

Answer 30

At least once a week.

Question 31

What is the relationship between retention rate and churn rate?

Answer 31

Churn rate is the inverse of retention rate.

Question 32

What is cohort analysis?

Answer 32

A technique to break down retention data by specific subgroups of users.

Question 33

What is one way to categorize cohorts?

Answer 33

By the time of acquisition.

Question 34

Why is tracking retention by cohorts important?

Answer 34

It helps identify issues with retention and understand customer behavior over time.

Question 35

What might a growth team discover through cohort analysis?

Answer 35

High churn rates during specific campaigns or time periods.

Question 36

What is a retention curve?

Answer 36

A visual representation of the retention rates of different cohorts over time.

Question 37

What can a sharp decline in retention indicate?

Answer 37

Issues with product fit or customer satisfaction related to marketing efforts.

Question 38

What should a team do if they notice a drop in retention?

Answer 38

Investigate the causes, potentially through customer surveys.

Question 39

How can cohorts be further analyzed?

Answer 39

By the channel that brought customers or by their usage frequency.

Question 40

What is a tipping point for customer retention in e-commerce?

Answer 40

Making three purchases within the first month after sign-up.

Question 41

What tools can be used for sophisticated cohort analysis?

Answer 41

Mixpanel, Kissmetrics, or Amplitude.

Question 42

What is a key strategy for improving initial retention?

Answer 42

Refining the new user experience to showcase the product's core value quickly.

Question 43

What is the Hook Model?

Answer 43

A framework for understanding habit formation through external triggers.

Question 44

What is the role of external triggers in habit formation?

Answer 44

They prompt action that initiates engagement loops leading to habit formation.

Question 45

How does the psychology of joining a gym relate to habit formation?

Answer 45

External triggers motivate initial attendance, which becomes internal motivation over time.

Question 46

What are some examples of habitual product use?

Answer 46

* Checking Facebook during breakfast * Posting on Instagram after work * Using Yelp for restaurant recommendations.

Question 47

What happens to individuals' need for external prompts after they experience rewards from an activity?

Answer 47

They often no longer need external prompts because the internal, subconscious triggers take over.

Question 48

What are the two essential rewards offered by Amazon's Prime program?

Answer 48

* Free shipping * Two-day delivery

Question 49

What was a common prediction about Amazon's Prime program?

Answer 49

Analysts predicted it would fail due to unsustainable free shipping costs.

Question 50

How did Amazon Prime change customers' shopping mentality?

Answer 50

It made them less likely to shop elsewhere due to perceived savings.

Question 51

What is a key factor that contributes to habit formation in products?

Answer 51

Improving the perceived value of rewards.

Question 52

What should growth teams do to enhance habit formation around their product?

Answer 52

Experiment with a range of rewards and encourage customer actions to receive them.

Question 53

What is an example of a behavior that could be analyzed to create new rewards in a video streaming service?

Answer 53

Binge watching habits.

Question 54

What are two types of rewards that businesses can offer?

Answer 54

* Tangible rewards * Experiential rewards

Question 55

What is the Yelp Elite Squad program designed to do?

Answer 55

It offers social recognition and perks to engaged users.

Question 56

What is a notable strategy for enhancing customer loyalty mentioned in the document?

Answer 56

Brand ambassador programs.

Question 57

What is the significance of achievement recognition in customer engagement?

Answer 57

It shows appreciation for customer milestones and actions.

Question 58

What is the role of behavioral emails in customer retention?

Answer 58

They notify customers of milestones and encourage further engagement.

Question 59

How has personalization in marketing evolved according to the text?

Answer 59

From a one-to-many approach to one-to-one customized experiences.

Question 60

What is the next wave of personalization powered by?

Answer 60

Machine learning algorithms.

Question 61

What does Pinterest's Copytune program do?

Answer 61

It tests variations of notifications to optimize user engagement.

Question 62

What can companies do to experiment with personalization in customer communication?

Answer 62

Use email marketing software to vary content based on past behavior.

Question 63

What is a common retention strategy for SaaS products and content providers?

Answer 63

Communicating upcoming features or product offerings to maintain customer interest.

Question 64

What is the purpose of using new features as a retention hook?

Answer 64

To communicate upcoming benefits to customers and encourage them to remain subscribed.

Question 65

Which types of products benefit most from the 'Coming Soon' tactic?

Answer 65

* SaaS products * Videogames * Content providers (e.g., Hulu, HBO)

Question 66

How does Netflix effectively use the 'Coming Soon' strategy?

Answer 66

By spacing out the release of new seasons of original series to keep subscriptions active.

Question 67

What is the impact of announcing a show like Rome on HBO's customer churn?

Answer 67

HBO experienced almost no customer churn between the announcement and the show's premiere.

Question 68

What is feature bloat?

Answer 68

The introduction of too many new features too quickly, complicating products and obscuring core value.

Question 69

What did researchers find about the relationship between the number of features and customer lifetime value?

Answer 69

Too many features can decrease customer lifetime value.

Question 70

What is ongoing onboarding?

Answer 70

A continuous process of educating customers about the value of new features over time.

Question 71

What is the 'ramp up' process in user experience design?

Answer 71

Gradually introducing users to new features after they master previous ones.

Question 72

How can growth teams test the effectiveness of ongoing onboarding messaging?

Answer 72

By sending emails to test groups with different versions of explanations and imagery.

Question 73

What is the term used for winning back users who have abandoned a product?

Answer 73

Resurrection.

Question 74

What are common reasons for customer churn that can be controlled by the company?

Answer 74

* Not installing the app after getting a new device * Lack of engagement with the product

Question 75

What should be included in a resurrection flow for inactive users?

Answer 75

A series of email communications or targeted ads designed to win them back.

Question 76

What percentage of users returned to Inman's site after receiving a targeted email notification?

Answer 76

29.4 percent more returned compared to the control group.

Question 77

True or False: Overdoing targeted email notifications can annoy customers.

Answer 77

True.

Question 78

What is a potential downside of constantly attempting to win back cold customers?

Answer 78

It may tarnish the customer's view of the company.

Question 79

How can companies identify 'zombie customers'?

Answer 79

By investigating why users have become inactive or canceled their service.

Question 80

What is the ideal scenario for customer education regarding new features?

Answer 80

Leading customers on a continuous journey of discovery.

Question 81

What role do growth teams play in the introduction of new features?

Answer 81

They evaluate the appeal of planned features and suggest experiments.

Question 82

Fill in the blank: Companies should consider having a larger number of more specialized products, each with a limited number of _______.

Answer 82

[features].

Question 83

What is a recommended approach to rolling out new features?

Answer 83

Testing prototypes or beta versions with a small percentage of users.

Question 84

What is the significance of timing the rollout of new features?

Answer 84

Rolling out changes too quickly can result in customer backlash.

Question 85

What is the main goal of the growth team when analyzing user data?

Answer 85

To uncover new product optimization opportunities.