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Acquisition, Conversion, Retention

 

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by Anthony Tumbiolo in building a business
January 28, 2017 0 comments
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Whether you’re a freelance writer, hair stylist, doctor, small business owner, or run a fast growing tech company, there’s one thing that unites everyone: the importance of the user journey.

If you don’t think about the user journey, you will fail.

The “user” is defined differently depending on what you do. For a freelance writer, it’s your client. For a doctor, it’s your patient. For a software company, it’s your customer.

For the purposes of illustration in this article moving forward, we’ll use the term “user”.

I’ve worked with a decent number of companies over the last four years running Jakt. Over time I’ve learned the companies who keep in mind the entire user journey when building their business succeed more than those who don’t. I’m not suggesting this is the only thing which makes a company successful, but without it, life can be rough.

There are three main components to the user journey I’d like to highlight. The companies and individuals I’ve seen succeed think about all three holistically.

Ignore one and there becomes a noticeable imbalance and deficit.

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Let me define each component (as I see them):

  1. Acquisition = how will you bring awareness to your product and acquire users?
  2. Conversion = how will you serve these users (what product or service will you offer) and how will you convert them to active and/or paying users?
  3. Retention = how will you keep these users coming back?

So why is each one important?

Conversion

Conversion is, in my eyes, the most important.

It’s the foundation of everything you do. The foundation of conversion is the product or service you offer. If the product or service doesn’t solve a problem or isn’t valuable, nothing else matters. You must get this right. Conversion also involves thinking through the business model – because even if your product is something people find valuable, if the pricing strategy isn’t right, you can still fail.

If your offering is great and your business model is solid, you can then focus on optimizing the conversion rate (i.e., increasing the number of people who go from looking at your offering to becoming an active or paying customer). There are a number of ways to do this and each situation is different. If you have a website or app, for example, you may look to analyze your onboarding flow (i.e., how you get someone signed up with your service or product) and see where improvements could be made to decrease drop off at each stage. If you’re an e-commerce business it could be analyzing how easy it is to go from browsing to purchasing. If you’re a dentist, it’s making sure your patient has all the required information filled out and sent to you prior to a visit.

Recently, my dentist failed at this and therefore lost me as a customer. I showed up to the dentist office ready for my appointment, only to find out that they didn’t have the right info from my insurance provider. Their response was something like: “Next time you should call ahead of time to make sure you have the right info for us.” I couldn’t believe it. I am the customer and they put the responsibility on me to have this info for them, when they are the ones who actually know what’s needed, not me. In my opinion it should be reversed. They should call me ahead of time and make sure they have all the info they need so when I show up, I can actually be seen. Instead, they waited until I actually showed up to see if they had all the info required, and then told me they didn’t. What a waste of time. It’s not only good for me, but also good for them. If I book an appointment and can’t be seen, they can’t replace my appointment on the spot and therefore lose money. Furthermore, they also lost a long term customer because I’d rather now find a new dentist than go back.

In short, your product/service and business model must be solid. If it is, you can then optimize the user experience to increase the conversion rate of paying or active users. In particular, don’t forget to focus on the onboarding experience.

Acquisition

Let’s talk about acquisition next. While I do believe conversion is the most important, without acquisition, no one will ever get to the conversion stage. You may have the best product or service around, but if no one knows about it, it doesn’t matter and you won’t have a business. You have to know how to find your customer and get in front of them. There are many ways to do this (ads, content marketing, influencer marketing, etc.). The best and most cost effective method will vary depending on your specific business. It’s important to run experiments (e.g., Facebook ads, influencer marketing, etc) to determine which works best for your business. Get this wrong, and it could be fatal. Without customers, you have no business.

Retention

And finally, there’s retention. Retention is important because it’s how you build the best user: a repeat user. It’s much cheaper to get a user coming back than it is to acquire a new user. Retention is figuring out how you get that user coming back for more. If you don’t retain the users you already have, you’ll constantly be trying to find new ones as the old one’s churn. This wastes money, as well as time you could be spending on other areas of your business.

I had a recent experience of retention done right that I’d like to highlight as an example. I’m a customer of Simple Contacts. They make it dead simple to order contacts via an app, without having to see a doctor. That alone makes me want to use them. But what’s even better is that they make it SO simple to reorder, and thus retain me as a customer. Because they know how many contacts I ordered previously, they can estimate when I’ll be out of them. About a week before I was out of contacts I received a text asking if I’d like to reorder. I texted back saying yes, and I had more contacts at my door just in time. Compare this to the typical doctor experience and it’s night and day. My old optometrist NEVER texted me. I never understood why. They knew how many contacts I ordered but failed to get my repeat business. I always had to call them to reorder. They didn’t make it easy for me to be a customer. This is a problem I’ve seen across so many industries, and it’s why tech-enabled businesses are in such a good position to disrupt these industries.

What’s most fascinating to me is how this concept literally applies to any business.

If you’re a hair salon, you have to think about how you acquire customers, the entire experience of getting a haircut, and how you keep these customers coming back. If you’re a singer, you have to think about how to get your music in front of people, produce great tracks, engaging with your fans, and producing more music to keep them coming back. If you’re a tech startup, you have to think about acquiring users, converting them to paid users, and retaining those users over time.

Always keep your user in mind when building a company. How you handle and think about the user journey can make or break your business.

 

 

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