What Are the Stages of the Customer Lifecycle?

A common misconception is that a user doesn’t become a customer until they make a purchase. Some companies compound this mistake by assuming that once the purchase is complete, they should focus all of their attention on finding new customers and moving on. 

In reality, someone becomes a customer the second they hear about your company and should be catered to throughout the entire customer lifecycle if you want to increase your revenue.

We’ll take you through the entire customer lifecycle in the sections below. 

What is the Customer Lifecycle?

The customer lifecycle is a measurement of where your customers are in their experience of your company. The lifecycle shows what stages your customers go through before purchasing a product and what they do after purchase. 

When someone discovers your company, they begin the customer lifecycle. There is no ‘ending’ to the lifecycle, because ideally, you bring a customer from the first stage to the last one and keep them there. Tracking and maintaining customer lifecycles is crucial for all successful businesses, regardless of industry.

What Are the Customer Lifecycle Stages?

There are five or six stages of the customer lifecycle: 

  • Discovery/Awareness
  • Engagement (an optional stage as it may not apply to every customer or industry)
  • Evaluation
  • Purchase
  • Use
  • Advocacy

These will be covered in detail in the sections below. 

Discovery/Awareness

The initial stage of the customer lifecycle is when the customer first discovers your company. Nowadays, users are bombarded with ads all over the internet, during their YouTube videos, commercials on streaming services, and in their social media feeds. With so many companies trying to catch their eye, you will need to do more to stand out from the crowd.

In this stage, people learn your company’s reputation, the types of products or services offered, and how you interact with your customers. You may take the Rule of Seven with a grain of salt, but customers are much more likely to remember you and buy your products if they’ve seen at least a few different advertisements. 

Remember that seeing direct ads is only part of the discovery process. Users are more likely to continue to remember and research a company if it was recommended to them by someone they trust. Recommendations through word-of-mouth or social media posts from influencers are potent ways to spread the word about your company. 

Engagement (Optional)

Depending on your industry and where you advertise, potential customers may reach out to your customer service reps for information. While the next step also involves research on the customer’s part, this stage focuses on the initial interaction with your company. First impressions are vital, so ensure that you have plenty of ways for potential users to contact you.

This is much more common in businesses where the service or product is a major investment for the customer or business (either in time or money). Cars, loans for bad credit  banks, major software upgrades or switches, insurance packages, and similar items require a large financial commitment from the user, and will likely require them to learn a new system, which can lead to lost productivity. So they’re more likely to reach out before making a decision. So they’re more likely to reach out before making a decision.

Evaluation

At this stage, customers will begin their evaluation of your company and your available products or services. They’ll likely check online reviews of your company and compare it to your competitors. In order to facilitate their research, we recommend having an informative website that is visually appealing and easy to navigate.

Some customers want to avoid the hassle of reaching out to a company directly (with certain exceptions, as mentioned above) and would rather direct their own research. If you make it difficult for customers to find crucial information about your company or product, they are likely to move on to one of your competitors.

Part of this stage is knowing what customers deem ‘useful information’. You can deduce what they find useful by learning about your audience, their demographics, and what they’re looking for. Kissmetrics’ person profile can give you detailed information about your individual customers.

Purchase

This is the stage of the customer lifecycle that every company looks forward to. The customer has decided to try your product or service and have committed to purchase. However, your work is far from done. Customer acquisition costs are often much higher than customer retention costs, so you should ensure that many of your customers stay loyal to your company. 

You can keep customers loyal by understanding what they want to see from you. Kissmetrics offers a variety of reports to measure user interaction with your products so you can see which features they utilize frequently. 

This is also a stage that may require additional support or assistance from your sales team. Customers in older demographics might have trouble completing online purchases, or slow internet could cause other customers frustration when the page loads too slowly. Poor UX could also make it difficult for customers to figure out how to complete the purchase. Those will be customers lost if you don’t take proactive measures to assist. 

Kissmetrics lets you track form abandonment and which customers continued through the sales funnel. We show you where customers drop out of the sales funnel so you make fixes to prevent such abandonment.

In the digital age, live chats are often preferred for customers who have trouble completing their purchases. Calling a line usually leads to being on hold for a while, and emailing can be the same. Live chats, on the other hand, provide a quick and straightforward access to a representative or chatbot without the inconvenience of making a phone call. 

Use/Experience

This stage of the customer lifecycle describes the customer’s experience with your company’s products or services. This is a vital time for your company to demonstrate good service should customers run into difficulties with your product. This stage is often a make or break piece of the puzzle for repeat customers.

Our path report demonstrates the number of customers who complete designated events in a given sequence. This can show you if the people who perform certain actions are more likely to commit to a purchase. Similarly, an activity report will monitor the number of customers who perform a designated action, like creating an account with your website. 

Even customers who don’t have any issues using their product may continue to read online reviews of your company and will continue to evaluate the value that your product adds. As stated previously, customer retention costs are often much cheaper than customer acquisition costs, so this is not a stage to overlook when it comes to staying on top of your customers’ satisfaction. 

You can also track social events like activities on Facebook, LinkedIn, and Twitter with Kissmetricsr. 

Bonding/Advocacy

Assuming your customer had a positive experience buying and using your company’s product, they may become loyal to your company and start advocating on their own. This could be as simple as mentioning their experience to their loved ones or posting about it on social media. Even if they aren’t influencers, word-of-mouth recommendations are valuable to your company because they come from trusted sources. 

Helping a customer become devoted to your company is essential for companies to make it big in their industry. For example, Apple has developed a dedicated following who always want the latest products and are vocal about their feedback because they know that Apple listens. 

Developing that kind of reputation isn’t easy, but it’s worth it in the long run.

Kissmetrics Tools for Customer Lifecycle Management

Kissmetrics offers a variety of tools for tracking your user base, so you can determine where they are in the customer lifecycle. 

Our funnel report charts users who perform events in a certain order so you can stay on top of where each user is in their customer lifecycle. For example, if you want to track the number of users who first click through an ad to your website and then navigate to a product page, our funnel report will show you numbers for each step of your sales funnel. 

Alternatively, if you aren’t sure which events usually lead to conversions, Kissmetrics has a path report which shows you precisely what steps users who become customers took before and after purchase. This path report can convey numerous insights such as:

  • What steps lead to a higher conversion rate
  • If there is an alternative path that leads to a shorter conversion time
  • Where your marketing team should focus their ads and which channels have the highest number of conversions

Why is the Customer Lifecycle Important?

Knowing where your customers are in their lifecycle allows you and your marketing team to tailor your communications to them accurately. People in the discovery stage are often not ready to make a purchase and will need more information before they reach the evaluation stage.

On the other hand, if a customer has been sitting in the evaluation stage for some time, they may be ready for a call-to-action that encourages them to purchase your product or service. 

Understanding your audience and what they need is the best way to steadily build heir trust and bring them in as customers. 

Conclusion

Understanding your customers is key to attracting new users and retaining existing ones. Everyone wants to feel like they’re understood and taken care of, and knowing where your users are in the customer lifecycle allows your marketing team to provide customized communications and your customer service team to provide assistance. 

Check out Kissmetrics for more information about managing and tracking your customers through their lifecycle. 

 

Sources:

  1. Definition – What is the Customer Lifecycle? | Tallyfy.com
  2. What Are the Stages of the Customer Lifecycle? | Astute
  3. 5 Stages of the Customer Life Cycle (Updated 2021) | Fool.com

Customer Analytics: What It Is and Why It Matters

Understanding customer behavior can be a challenge for some businesses. To gain a better idea of your customer’s mindset, you need data about customer behavior. This data can help shape your strategies and processes to create better customer interaction and lead to higher product satisfaction. 

Gaining customer insight through data is key to success for modern businesses. The process of gathering customer data to help make decisions in your business is called customer analytics. 

Customer analytics can be broken down further into two types of analysis: market segmentation and predictive analytics. Here, we’ll discuss how to gather your customer data

Market Segmentation

The market your company targets is likely large and diverse, but targeting all customers with the same tactics can be ineffective in increasing profits and growing your market reach. 

Market segmentation is the process of dividing your customer market into smaller segments based on customer characteristics or traits. By dividing your customers into groups, you can target these groups with specific ads based on their habits and where they are in the buying process. Market segmentation will also allow you to see which type of marketing is most effective for each segment. 

Social media may be the best form for one group, while emails may be more effective for another. The messaging in your advertisements can also be changed from segment to segment. This will help your company resonate with all customers no matter how different they may be from one another. 

Market segmentation is a vital strategy for companies looking to create efficient marketing plans to grow their customer base.

Predictive Analytics

Studying current and historical data to make predictions about future events is considered predictive analytics. Predictive analytics has many uses across many industries, and sales and marketing are no exception. 

By analyzing historical trends of customers, you can start to make predictions about future actions. Many outside factors can affect customers’ shopping habits, such as weather or stock market performance. By looking at historical trends of customers during certain events, you can start to make better predictions about future customer behavior. 

Predictive analytics can also be used on your company’s current customers. Analyzing the behavior of new customers can help recognize patterns such as how long customers spend browsing your site or what products long time customers tend to focus on. 

This can help you predict how future customers will act and allow you to tailor your site to fit their needs.  

What Is the Goal of Customer Analytics?

With customer analytics you gain greater insight into how your customers or potential customers behave which allows you to make more educated business decisions in the future. 

The goal is to move away from a hunch about how your customers will react and use data to back up your future actions. Some businesses stay with certain processes out of tradition but customer analytics can give teams the power to see if traditional lines of thinking are working for the business. 

Kissmetrics has successfully helped several businesses leverage their customer analytics.

How Do You Use Customer Analytics?

Once you’ve started gathering customer analytics data, you need to create actionable items. Some ways to use customer analytics are:

  • Direct marketing
  • Site selection
  • Customer relationship management

Direct Marketing

A marketing message sent straight to a consumer would be considered direct marketing. Forms of communication like personalized text messages, emails, or social media messages would be direct marketing. 

Messages can be tailored to users in specific situations using the data gathered from customer analytics. For example, targeting new homeowners with home improvement products will result in a higher conversion rate compared to a mass email. 

Direct marketing can also be targeted to users who have visited your site but did not make a purchase. Sending a reminder message with details about the products they viewed would be a perfect use of direct marketing.  

Site Selection

Choosing the location of a new store or site is an important process for any company. By using user analytics, your business can get a narrowed view of what sites or locations would be successful by analyzing your customer base. 

Knowing where your current customers frequent is key to selecting a good location. If you’re looking to grow your user base, it’s important to look at predictive analytics to see where your company’s best potential growth area is.

Customer Relationship Management

Customer satisfaction is a key metric for the success of all businesses. Customer relationship management is the focus of analyzing how a business interacts with its customer. Using large amounts of data gathered during user analytics makes it easier to understand what communication methods and styles work best with your customers. 

If your business caters to younger users who frequent social media, you may find it best to communicate with users via a social media platform.

Why Does Customer Analytics Matter?

Gathering and analyzing large amounts of data on your customers can be a challenge for some companies. Some of the big reasons you should be collecting customer analytics are because you can:

  • Increase sales
  • Lower customer acquisition and retention costs
  • Reduced customer churn
  • Increase customer loyalty
  • Increase marketing and promotion ROIs
  • Increase sales force effectiveness

Increase Sales

Targeted advertising using customer analytics means customers see ads tailored for their needs and wants. This more effective way of advertising leads to more customers and increased sales for your company.

Lower Customer Acquisition and Retention Costs

Gaining and keeping new customers can be costly for some businesses, so if customers are leaving, it’s important to understand why. The data provided from customer analytics can give you insights into customer dissatisfaction.  

Customer analytics can also show you what potential customers are interested in and what features would drive them to a new product. By having this information at your disposal, you can target the proper customers saving you customer acquisition and retention costs.

Reduced Customer Churn

Customer churn rate is a measure of the number of customers that leave your company over time. Gathering data on why customers leave would be part of your customer analytics dataset. 

Gathering information on what’s driving customers away is the first step to fixing customer churn.

Increased Customer Loyalty

Keeping customers loyal to your company is a great way to strengthen sales and increase your bottom line. Customer analytics can give you data on why customers choose your products and what keeps them loyal to your company. 

By understanding why some customers don’t return to your site, you can adjust your products or services to suit their needs better.

Increased Marketing and Promotions ROIs

Running marketing ads and promotions can be expensive for any business. Spending money advertising to customers who have a low chance of buying your products is not a good use of resources. So by ensuring your ads and promos are targeted to the right audience, they’ll be more effective and thus save you money and increase your ROI.  

Increased Sales Force Effectiveness

An easy way to help your sales team is to provide them with good customer analytics data. Information on what markets are performing well and what details customers are interested in is a great way to help your sales team be more effective. 

By using predictive analysis, you can give your sales team a better idea of where the market will move to allow them to plan for upcoming changes.

Conclusion: How Can I Optimize Customer Analytics for My Business?

The process of collecting and analyzing customer analytics can be a large task for businesses. 

Knowing what metrics are important to your business and how to track them is key for proper analysis. In addition, using the correct tool to gather customer data is necessary to create effective plans to improve your business strategies.

Customer Analytics is something all companies should be collecting and analyzing. Properly utilizing this data can lead to higher customer satisfaction and cost savings for your marketing campaign. By having the proper information, you can target your audience and convert more potential customers.

Visit Kissmetrics for more ideas on optimizing your user analytics. 

 

Sources:

  1. Market Segmentation Definition | Investopedia
  2. Direct Marketing Basics | The Balances MB
  3. How To Prevent Customer Churn With A Simple Phone Call | Forbes

What Is Time On Site? Everything You Need to Know

One of the buzzwords frequently mentioned in digital marketing is time on site or session duration. It’s often discussed in conjunction with bounce rate, time on page, and similar metrics and collecting this data is a good idea. But learning how to leverage it to move the needles is a better one.. 

Time On Site vs. Time On Page vs. Bounce Rate

Time on site, also known as session duration, is the total amount of time that someone spends navigating through your website. It is calculated by noting the timestamp when a visitor clicks through a search engine or link to your landing page and the timestamp when the visitor navigates away from your website. 

Time on page, as the name implies, measures how long someone spends on a single page. Bounce rate, on the other hand, measures the percentage of visitors who visit a single page on your website before ending their session and clicking on another website.

Why is Time On Site Important?

Time on site is the best metric for determining how useful visitors find your entire website, instead of just focusing on one page. It answers questions like: how long do they spend shopping before purchasing a product? Are they reading multiple articles from the blog entries? 

Is Time On Site the Same as Dwell Time?

Dwell time is a measurement of how long a user spends on a single page found through a search engine. The dwell time is measured by timestamps marking when a user clicks a link from a search engine to when they navigate back to their search results. Time on site, on the other hand, is the total amount of time a visitor spends on your website.

If a visitor spends a few minutes evaluating the webpage and navigates away from your website, it won’t count as a session because sessions don’t include time spent on exit or bounce pages. 

What is the Average Time On Site?

The average time on site takes the total number of hours spent on a website during a specified period and divides it by the number of new sessions. Keep in mind that a single user may have multiple sessions if they log in to your website over a number of days or come back to what they were doing later. 

How is Time On Site Measured?

Time on site is measured by using Kissmetrics’ analytics tool to note the timestamp when a user begins their session and compare it to the timestamp when the user exits their session. From that information, the tool determines the length of time someone spent on your website. 

Is Time On Site a Search Ranking Factor?

Time on site is not a search ranking factor. Google is the most commonly used search engine, and since over half of their websites don’t use Google Analytics, they have no way of accurately measuring time on site for those sites. Without that data, time on site can’t be a factor they use in ranking. 

How to Analyze Time On Site Metrics

There are a few things to keep in mind when analyzing your time on site metrics. The first is that your average time on site may not answer all of your questions about user activity and how they’re interacting on your website. For example, simply telling you that the majority of users spend thirty minutes on your website doesn’t provide actionable information.

The same thing could be said for individual user time on site. Someone might’ve only spent a minute on your site because they realized they didn’t enjoy the content, the page took too long to load, they were frustrated by the advertisements, or the next steps weren’t clear. You simply don’t know the details.

How to Report Time On Site Metrics

Segmenting users into cohorts based on the amount of time they spend on your website can help you determine whether you are providing enough instructions about how to proceed down the conversion funnel. If you notice that a large percentage of users are following the conversion funnel faster than you anticipated, that could indicate that they are skipping some critical steps or have found a faster path.

Alternatively, if you notice that a large percentage of users are spending more time on your website than you anticipated, there may be some confusing factor that is slowing down their journey. This could be a lack of internal linking, slow-loading pages, or other issues that are bogging down your users. 

How to Improve Time On Site?

In many cases, you’ll want users to spend more time on your website. If your website only has a home page and product pages, visitors who don’t want to make a purchase won’t have any reason to stick around on your website. Even people who do make a purchase can do so fairly quickly. If you want to improve time on site, try some of the following options. 

Include High Quality Content

In addition to your products or services on offer, the majority of websites include other pages full of high-quality information. These pages might describe the company founders, what they hope to accomplish, where the products are made, instructions for using the products, information about the features, and ways to use the products. 

Whatever content you decide to include, ensure that you grab your readers’ attention and keep it. Choose a tone that represents your company and information that appeals to your audience. From there, your users will want to read more about your company and what you produce. 

Use Relevant Keywords

You might have the best content in the world, but it won’t matter if the right people can’t find it. Writing an in-depth article about hurricane insurance won’t be of any use to people looking for information about car insurance. 

If you don’t use relevant keywords, your article may appear in a search for people who aren’t looking for housing insurance or may not appear when people search variations on the terms. 

Optimize Your Page Load Time

One of the biggest reasons for a high bounce rate and minimal time on page is a slow load time. People expect pages to load within a second and for every second they spend waiting for your content to load, they become increasingly likely to navigate away without ever seeing your page.

While some users will try refreshing the page, you can’t count on everyone to have fast internet connections, so you’ll need to design your web pages for the lowest common denominator.

You can optimize your page’s load time by limiting the use of complicated graphics, fonts, or formatting. Minimizing the use of tactics such as moving images, embedded videos, or automatically activated music can help your pages load faster. 

You can never go wrong with a clean, sleek aesthetic, especially if it’s the difference between people staying and immediately leaving out of frustration. 

Use Internal Linking

Another way to show your readers that you have more great content waiting for them is through internal linking. Linking to your sources during informational articles is necessary to prove how thorough your research was, but linking to other pages on your website is a good way to keep your audience engaged for longer.

For example, if you create a blog detailing the benefits of one of your products or how to use a key feature, you should add a link to the product description page. That way, if a visitor finds the page on a search engine, they’ll be able to find the product you’re describing. Or, you can link to more internal content that delves into similar topics if the reader wants to learn more. 

Limit On-page Widgets, Pop-ups, and Ads

Finally, you should do your best to limit the number of pop-ups and outside ads on each page of your website. Adding a few links to affiliates isn’t a problem, but your visitors are there to learn more about your company, not someone else’s. If you have multiple pop-ups that assault the reader as they scroll down or on every page, they may get frustrated and stop their session.

Conclusion

Understanding how long your users spend on your website gives you information about how deeply they’re interacting with your content. As you create and refine your conversion funnel, it’s useful to know how long it takes users to proceed from finding your website to making a purchase. Alternatively, you can find out how much time they spend reading the articles you create. 

Check out our website for more information on reporting essential metrics and how to leverage the information.

 

Sources:

  1. What is Average Time on Site? – Average Time on Site Definition | Popupsmart.com
  2. What Does Avg Session Duration Tell You? [vs Time on Page] | Hotjar.com
  3. What Is Dwell Time & Why It Matters for SEO | Search Engine Journal

Everything You Need to Know About POP Marketing

The concept of POP marking is nothing new for traditional in-person businesses. Cardboard displays in grocery stores have been used for decades to help drive up sales of certain products.  For ecommerce sites, there are different techniques to use POP marketing on customers.

What Is POP Marketing?

The strategy of targeting users while they’re already shopping is POP marketing. This is a late-stage form of marketing because users are on your site and in the process of purchasing. POP marketing would not be considered top of the funnel marketing

The idea behind POP marketing is you target users that are already in a buying mood, making it potentially easier to add on to or upgrade the product they plan to purchase. Pop marketing could be signage around the product showing more details or suggesting complementary products to what’s already in a customer’s cart.  

The strategies for POP marketing are things you may see every day and not even realize. Signs at gas pumps offering a sale on soda inside the convenience store would be considered POP marketing. Customers are already stopping to purchase gasoline, so getting a soda would be a “might as well” purchase. Candy placed by registers is also a form of POP marketing. 

In essence, they’re items that didn’t bring you to the store to make a purchase, but you end up grabbing them out of impulse or ease of access. 

For ecommerce sites, POP marketing would be suggesting similar products or showing opportunities for an upgrade. It may seem more difficult to market products to someone at the checkout online, but there are techniques to get customers to purchase additional products. 

What Is Point of Purchase (POP) and Point of Sale (POS)?

The point of purchase is a marketing term used to describe the placement of products or advertisements around point of sale systems. POP would be considered product displays around the checkout area or at the end of an aisle in traditional brick-and-mortar shops. 

POP can also be considered any promotional activity to help sell a product, such as a two-for-one sale or first-time customer discount. For ecommerce sites, POP would be how products are displayed on your website for customers who are actively shopping.

POS or point of sale is the location and time of purchase of a product. This would be the cash register or checkout system for traditional stores, where goods would be exchanged for cash or credit. 

For an ecommerce site, this would be the checkout page where payment information is entered, and the order is submitted. While the checkout experience may be different from site to site, the process itself should be straightforward for the customer. 

The POS system your site uses must be secure and easy for customers. Accepting numerous forms of payment and having a simple checkout process will lead to higher sales conversion and better customer satisfaction. 

What Are POP Materials?

POP marketing can be enhanced beyond product placement with the use of POP materials. 

Some examples of POP materials are flyers, emails, website pop-ups, or cardboard display stands. These POP materials should help promote your brand and, in some cases, offer more details about your products. Cardboard displays of products are a popular choice for in-person shopping. These can provide more information on your products while also providing a large visual display of your company. 

For online businesses, pop-ups during checkout are one way to show users additional products they may be interested in. Suggesting additional services or warranties on top of a product would be considered POP marketing. Targeted social media posts are another good way to get additional purchases from a customer. Item displays are another common way pop marketing is used in ecommerce sites.

Pop materials should be targeted in a way that is logical for the customer. If a customer is purchasing an inexpensive item targeted at someone on a budget, the POP marketing items should be similar in type and value. For example, you shouldn’t suggest a high-end, top-of-the-line product to someone looking to buy a budget-saving product. Your product displays should be in the same league as the product the customer plans to purchase to maximize the chances of a successful conversion. 

Product displays showcase one or multiple products to customers. There are multiple ways to present products to customers, so it’s good to understand the basic types.

If you need to know what POP marketing ideas or products would be the best fit for your website, let Kissmetrics help. With our tools, you can analyze your user search topics and paths to conversion. 

What Are the 4 Basic Types of Displays?

The key to successful POP marketing is properly displaying the additional products. These are often done on a product page or during the checkout process. Pop marketing should be something all ecommerce sites incorporate to help boost sales and customer lifetime value. The four basic POP marketing display types are:

  • One time displays
  • Similar products
  • Related products
  • A cross mix of items

One Item Displays. A one-item display is the showcase of a single product to a customer. This is a good technique for showing off a new product or boosting a struggling product’s sales. 

A one-item display can be a pop-up or a highlight in the product catalog, depending on your site layout. If you’re looking to dive into more detail about a product, a one-item display is probably the best choice.

Similar Products. Another type of product display is a similar products section. When customers are viewing a product, a list of similar products can be displayed on the same page to give the customer alternatives to what they are viewing. 

This is an effective form of pop marketing, especially for customers that take a direct link to your product page. In a direct link case, the customer may not be aware of other products you offer. By listing similar products, customers may find a better fit for their needs, increasing customer satisfaction and increasing the likelihood of a purchase.

Related Products. An alternative to a similar product display is a related product display. Like similar product displays, related product displays could be shown on a product page or during the checkout process. These related products could be accessories or add-ons to the current product the user is interested in. 

If your business sells products that are part of a product package showing related products is a must. If the product your customer is viewing is an accessory to another product, showing the parent product as a related product display is vital. 

If, after product research with Kissmetrics, you find that customers tend to buy two or three products together, it’s a good idea to make that package suggestion to other customers. 

A Cross Mix of Items. A product display to show the range of products your company offers would be a cross mix of items displayed. A cross mix of items is a great display for companies looking to expand beyond just a popular product. 

Showing customers your company’s range of product offers can increase customer loyalty and lifetime customer value. Showing a mix of high-margin items that are a good fit for your customer is a smart way to increase overall revenue.  

A cross mix of items is also a nice way to increase product awareness among your customers.  

Conclusion: How Can I Use POP Marketing in My Business?

POP marketing is something all ecommerce sites should use. It strengthens sales figures and delivers value to your customers by providing them with options. By making customers aware of a product they may not have known about, you increase can your profits and deliver increased value to the shopper.

Capitalizing on customers already planning to make a purchase is “best practice” for all ecommerce sites. While the process is different for brick and mortar stores vs. online businesses, the thought process behind POP marketing is the same.  Properly targeting customers who are already making a purchase can benefit your company and the customer. 

You’ll need the right analytics data to understand how best to market your products. Request your Kissmetrics demo today to see how we can help you with your customer insights. By properly utilizing POP marketing, you can make your customers happier while increasing your bottom line.

 

Sources:

  1. [Point-of-Purchase] | What Is Point-of-Purchase Marketing? | Chron.com
  2. The Difference Between “Point of Purchase” and “Point of Sale” | Displays2Go
  3. What Is Point-of-Purchase Marketing? | AZCentral

Customer Lifetime Value: What is it and How to Calculate It

One of the most critical KPIs for your company to track is your customers’ lifetime value (CLV). Customers are key for any business and knowing what your customers are worth is critical. Customer lifetime value is a perfect metric for companies looking to understand the potential each new client brings to the table.

What is Customer Lifetime Value (CLV)?

Your CLV is the calculation of how much money the average customer contributes to your company over the duration of their relationship with your company. This KPI is helpful for seeing how much each customer spends and determining the true value of gaining and keeping a new customer. 

Why is CLV Important?

Customer lifetime value gives your company important insight into the potential value of each customer, making forecasting a much easier process.  It’s critical for any business to understand what each customer is worth from a financial perspective. Customer lifetime value gives your company a clear view of the financial value provided by each customer. 

For instance, when looking at customer retention, CLV is a perfect KPI to use for justifying a budget. CLV can also help determine customer loyalty programs. Discounts or incentives can be justified based on the value each customer will continue to bring to your business.        

How Does CLV Relate to Customer Acquisition Cost (CAC)?

Customer lifetime value is a great KPI to compare directly against customer acquisition cost.  When dividing CLV by CAC you then get the ratio of CLV to CAC, a sign of customer profitability and how efficient your marketing strategy is performing. 

Remember, attracting new customers to your business can be an expensive process, especially if you don’t have a clear understanding of what each customer can bring to your company. So, It’s also important to make sure CAC isn’t outpacing CLV. 

If your business model does not rely on many repeat customers, then you’ll need to account for the cost of acquiring new customers. CLV is a helpful KPI to use when setting budgets for attracting new customers. 

How Do I Calculate Customer Lifetime Value?

Customer lifetime value is a calculation of multiple data points. These points can vary from company to company depending on the products or services being offered. Kissmetrics can help you narrow in on the most important metrics for your situation with our Metrics tool. Some of the most popular data points to calculate CLV:

  • Average purchase value
  • Average purchase frequency rate
  • Customer value
  • Average customer lifespan
  • Final CLTV

Average Purchase Value

The average purchase value is a metric that represents the average cost of a purchase made by a customer. This metric will often be used alongside a metric that shows the average number of units per transaction. Average purchase value will vary widely depending on your products or services. Kissmetrics can help you narrow in on a good goal for your company. 

Average Purchase Frequency Rate

The average purchase frequency rate is the measure of how often customers are buying services or products from your business. The calculation for this metric is the number of goods or services sold in a period divided by the number of unique customers in the same period. The period for this measure can be set based on how far back you’d want the trends observed.

Customer Value

A metric that shows what value each customer brings to your company over a given period is customer value. When you combine the average purchase value and the average purchase frequency rate, you can then calculate the customer value metric. The customer value metric is also time-sensitive, so it will need to be calculated over set periods of time.

Average Customer Lifespan

The average length of time a person is an active user with your company is calculated as the average customer lifespan.  The parameters for what constitutes an active customer will depend on your business but should include customers that are spending money with your business on a regular basis. If a customer leaves for an extended period and then returns, they would most likely count as a new customer. Average customer lifespan is the final metric needed to calculate customer lifetime value.

Final CLV

In order to calculate the CLV, you need to have your business’s average purchase value, average purchase frequency rate, and average customer lifespan. With these metrics, you’ll know how valuable each customer is at any given time and how long they are likely to stay a customer of your business. These measures will then give you the CLV metric, which is key for projecting the long-term outlook of your business.

What Main Factors Affect My Company’s CLV?

Customer lifetime value is influenced by many factors in your business so it’s important to monitor all metrics that drive your CLV, but some are more important than others. For most businesses some of the key factors are:

  •  Churn rate
  • Customer loyalty
  • Customer satisfaction
  • Scalable sales and marketing

Churn Rate

When referencing customers, the churn rate is the number of customers that leave your business over a given period. Some churn is normal for all companies, but it’s key to monitor this metric and compare it to the new customers gained over the same period. Since churn rate measures how many customers are leaving your business, it plays a huge factor in your company’s CLV metric. Finding ways to reduce your churn rate and hold on to customers is an excellent way to increase your CLV.

Customer Loyalty

The customer loyalty metric is a measure of how likely it is that a customer does repeat business with your company. This metric is also set over a specific period, depending on your business type. Getting a new customer to your business is important, but bringing back a customer for repeat business is even better. Customer loyalty has a huge impact on your CLV KPI. Even slight increases in the number of customers that become repeat shoppers will yield big increases to the CLV number.

Customer Satisfaction

How happy your users are with your company is the customer satisfaction metric. Unlike the other metrics, feedback from customers is required to measure customer satisfaction. Tools like feedback forms, surveys, product reviews, and other rating forms can be combined to create an overall customer satisfaction metric.  Customer satisfaction has an indirect effect on many metrics, most importantly CLV. No matter what products or services your company offers, customer satisfaction should always be something a company strives to improve.

How Can I Improve My Company’s CLV?

Improving your company’s CLV is vital to the growth and success of your business. A few great ways to improve your CLV are:

  • Email and SMS retargeting
  • Loyalty programs
  • Open communication
  • Effective onboarding

Email and SMS Retargeting

Some handy tools for helping convert more sales are email and SMS retargeting. It’s important to collect existing, and if possible, new, email addresses or phone numbers from your customers in order to send them retargeting content. Emails or SMS can contain things like requests for product reviews, reminders to finish checking out a cart, sales notifications, new product alerts, and other notifications to get them back to your business. These are great ways to get more customers back to your site, increasing your CLV metric.   

Loyalty Programs

Creating a system that rewards customers for staying with your company would be considered a loyalty program. Signing up for emails or SMS could be an effective option for loyalty programs. As customers spend more money, the rewards could increase, giving increased incentives for the customer to remain loyal to your company. Rewarding top customers helps customer satisfaction and increases CLV.

Open Communication

Creating open channels of communication helps build customer trust and holds your business more accountable. Gathering customer feedback to look for improvement is a good example of open communication. Customer opinions can often provide insight on products or services that may not have been previously considered. Having a quick and responsive customer service department is a great way to achieve open communication with your customers. Better interactions with customer service improve a customer’s satisfaction which helps to increase their CLV.

Effective Onboarding

Customer onboarding is key to setting up a good relationship with new customers. Making sure customers get the proper information about your products and services maximizes the value your company delivers. The onboarding process can also be about teaching customers how to work with your business. It’s a good opportunity to establish a good line of open communication, critical for improving CLV.

Conclusion

While the calculation for CLV may vary slightly by company, the importance is high for all companies. When making decisions in your business, always keep CLV in mind. Kissmetrics can help you track your CLV and other important KPIs. Company growth and success depend on a strong customer base that continuously returns to your products. 

 

Sources:

The Case for Customer Value as your Lead Metric in 2021

The Value of Open Lines of Communication with Customers

The Four Secrets Of Achieving Customer Satisfaction

featured image How to Manage Third-Party Risk in a World of Breaches

How to Manage Third-Party Risk in a World of Breaches

 Customer trust is essential to every organization. Unfortunately, third-party breaches are common these days, as the statistics also suggest the same. It is very common for cybercriminals to steal sensitive data from third-party vendors and put it to use to cause loss of money and reputation to the organization. Therefore, you must opt for improved risk management strategies and robust practices against system breaches to manage third-party risk efficiently.

As these third-party risks are increasing day by day due to less transparency in the system and indirect security control, it is the need of the hour to work on these serious risks having the potential of posing long-term harm to the organization’s reputation directly. 

Every vendor largely impacts your overall security. Therefore, there is an urgent need to manage risk effectively and keep the incoming vendors’ operations smooth. So let’s dive in quickly and understand the same for better results:  

Careful vendor process of selection: 

It is very important to carefully select the vendors as they will have access to all the important information related to the users. In this case, you must measure the cyber security risk associated with it. Unfortunately, many organizations do not adequately go through the vendor selection process and pose the consequences at a later stage. Several organizations have adopted a very important measure of assigning security ratings by preparing compulsory penetration tests and series of questions to understand the external security offered by the vendors. In addition, there are certain websites available online that can access the risk related to cyber security and breaches for you in an understandable manner.

Managing the risk through special certificates: 

Another method to keep the security in check is to use the special certificate that will help you avoid all the third-party risks that can cause harm to the image of your organization. SSL certificate is one such alternative that has been used widely to guard sensitive data and keep the customer trust intact. SSL certs are available in varying kinds and encryption levels. Choosing the right one that suits your unique needs best is important. If you need to secure multiple domains and subdomains at different levels, investing in a multi domain SSL cert is recommended. Multi-domain SSL certs provide premium security to up to 250 FQDNs under an umbrella certificate at affordable prices. They’re highly compatible to meet the needs of different organizations and provide encryption as per the unique needs of the same.

Security Risk Management Strategy: 

The vendor contract must include a proper vendor risk management strategy that will help protect the data in every form. In this way, the vendor will be responsible for the security state at a particular time. Apart from this, a series of questions must be additionally designed to check the position of security offered by the vendor from time to time. This is an important step to access the external security as offered by the vendor. Such strategies help in reducing the number of breaches and strengthen the overall security of the organization.

An all-time ready list of vendors and timely monitoring: 

To correctly determine the risk associated with third-party vendors, you must keep the list of third-party relationships ready at all points of time. As the level of risk introduced by the third-party vendors is too high and very few vendors perform the risk assessment and handle the sensitive data correctly, you need to take measures for better security.  

There are platforms available for instant vendor search that help you keep a check on all the vendors associated with your organization. The security coverage offered by the vendor may change over time, and that is why it is very important to continuously monitor the level of security offered by them. The organizations should not rely on the point in time assessment but rather go for continuous audits to assess the security’s actual position.

Cancel relationships with not-so-trustworthy vendors: 

It is expected from all the third-party vendors to maintain certain standards while working with an organization. If a vendor fails to serve the promise, the organization should take a step to protect the security. It is important to talk about the cyber security risks associated with the vendors to give them an insight into the improvement areas. It seems that most of the organizations easily onboard third-party vendors but struggle a lot in offboarding them. To assess the sequence of a risk factor posed by different vendors, certain platforms are available in the market that shows a particular vendor’s level of security.

Providing minimum privilege to the third party: 

Every organization should ensure that the third party has limited access to carry out the operations. Managing third-Party risk involves determining the distribution of power of access thoughtfully among the parties responsible for carrying out major operations. The access must be provided according to the principle of least privilege followed by top-notch organizations to ensure proper security systems and control.

CONCLUSION:

To keep things operational, you must keep your security in check and identify all the data leaks in time. Along with this, it is important to monitor all the third parties involved in an organization continuously. Amidst the myriad of operations, keep your security in check and identify all the data leaks in time. Along with this, it is important to monitor all the third parties involved in an organization continuously. Amidst the organization’s mighty yard of operations, security should occupy the top, please.

Google Chrome Removes 3rd Party Cookies | Implications for Digital Marketers

What Are 3rd Party Cookies?

3rd party cookies are cookies that are created by a different website or domain than the current website you’re browsing. Online advertisers commonly use 3rd party cookies to track users’ activity across various websites. This information provides more insight into users’ tendencies and behaviors, which in turn helps advertisers tailor their strategies.  3rd party cookies are only accessible on a domain if that domain allows outside parties’ cookies. 

How Are 3rd Party Cookies Different from 1st Party Cookies?

The main difference is the domain the cookie lives on. A first-party cookie is created by the website you’re currently browsing, while a 3rd party cookie is created by a different site altogether. 

For a 3rd party cookie to load, the website you’re browsing needs to load that 3rd party server’s code. For a 1st party cookie, any code on the domain could potentially read and set the cookie. A 3rd party cookie needs code from the publishing domain in order to read and set the cookie.

Why Are 3rd Party Cookies Important for My Business?

One of the most common uses for 3rd party cookies is targeted advertising. Because these cookies follow you from website to website as you browse, they report back your browsing history and searches. 

Have you ever searched for beach vacations and a few days later started to notice ads about beach trips on your browser? This could have been from a 3rd party cookie tracking your activity. 3rd party cookies can also be used by support chat systems provided by another service. These chat systems are operated by outside companies that need to be loaded on your domain. 

Why Is Google Chrome Removing 3rd Party Cookies?

Chrome is stepping up and offering users more privacy when browsing by removing 3rd cookies. Other browsers, such as Safari and Firefox, have already taken action and removed 3rd party cookies. Most users don’t fully understand how cookie tracking works and what information is collected by 3rd parties. Advertisers could use 3rd party cookies to track your entire browser history which critics would say is surveillance and an invasion of privacy. 

While some would argue that 3rd party cookies offer tailored ads that are helpful, most people feel the cons of invasive web tracking outweigh the pros. Google has been slower to transition, the thought being they’re trying to balance between online advertisers and personal privacy. 

Their solution is called the privacy sandbox.

What Is the Privacy Sandbox?

The privacy sandbox is a series of proposals by Google that will allow users more privacy and will still preserve the ability for advertisers to tailor ads. This initiative will replace 3rd party cookies and keep users’ data private. 

The privacy sandbox will lump users with similar browsing histories together, allowing advertisers to target groups with tailored ads without seeing an individual’s personal data. Google created the privacy sandbox to avoid blocking the user’s browser history altogether, keeping advertisers away from less transparent forms of tracking data. 

Users will still have the ability to change settings and opt-out, but by default, the privacy sandbox will offer more shielding from companies looking to collect personal browser habits.

What Will Replace 3rd Party Cookies?

Despite some of the privacy concerns, 3rd party cookies have value and provide valuable information. So, with Chrome removing 3rd party cookies, what will replace them? Some of the notable options are:

  •  Identity Graphs
  • Conversion Measurement APIs
  • Contextual Advertising
  •  Aggregate Reporting APIs
  • Trust Tokens
  • Capped Privacy Budgets
  • Federated Learning of Cohorts (FLoc)

Identity Graphs

An identity graph is a database or table of user-profiles and identifiers that are tied to users. The profiles are generic types of users that could be assigned to a group based on certain qualities. 

Some examples would be a new homeowner profile or a recently retired profile. Identity graphs can also contain personal information such as an address, birthday, mobile phone, and email. All this information can be combined to create an advertising plan specific for a user based on profile and personal information.

Conversion Measurement APIs

A more anonymous way to track the success of an advertising campaign is the conversion measurement API. When a user clicks on an advertisement, an API call is made signaling that the ad was interacted with. The API call can attach information like campaign id, or click id, or the time and date of the interaction. 

When the user gets to the advertiser’s website, the API information can be tracked to see if that visitor makes a purchase. Conversion measurement APIs can track how effective ads are on visitors without using potentially invasive 3rd party cookies

Contextual Advertising

Contextual advertising is an approach based on webpage content instead of user behavior. This is a way of targeting based on website content or mobile applications, not the users who browse them. 

Contextual advertising reads the text of a page and searches for keywords or phrases and loads advertisements based on those search results. Users are kept anonymous since the targets are solely based on the webpage content. 

Aggregate Reporting APIs

When looking to get the big picture of advertising campaigns, aggregate reporting APIs are a great option. These reports would be used for seeing the performance of advertisements across multiple metrics, which will help to give a better sense of overall performance. 

Examples could be reports of which ads perform the best by age group, or what types of ads have the highest level of interaction. Aggregate reporting APIs can vary widely, but when combined, they help give you a good idea of the overall effectiveness of advertisements. 

Trust Tokens

An anonymous way to verify users is by using trust tokens. Trust tokens work by assigning users an encrypted token that is stored in the user’s browser. This trust token can then be used to authenticate a user without requiring any private information. 

The token will stay valid during the session and allow the user to browse the domain securely. The user’s activity can then be tracked and stored for research without requiring any additional personal information. 

Capped Privacy Budgets

Capped privacy budgets are a way of limiting the number of private information advertisers can see. Giving advertisers access to some personal information can be helpful for making ads more targeted and relevant. If advertisers exceed the cap amount they could be restricted from advertising on the site.  By limiting the amount of personal information that is collected, users can browse with more privacy and less intrusion.

Federated Learning of Cohorts (FLoc)

The federated learning of cohorts (FLoc) is a new approach to track ad performance that uses machine learning to group users. The FLoc approach can gather browser history, the content of webpages or other specific factors to assign a user to a cohort. The code that creates the user cohort would live on the browser, keeping the users’ private information from being uploaded elsewhere. The browser can then expose the cohort so that advertisers can use this to target ads specific to the user. Federated learning of cohorts is an excellent alternative to 3rd party cookies because it gives advertisers the data they are looking to track while keeping users private information safe. 

How Will This Affect My Business?

If your business relies on 3rd party cookies, you’ll need to plan for an alternative moving forward. With support from Chrome ending, businesses will need to adapt to the new system Chrome implements. If your website allows advertisers that use 3rd party cookies, you’ll need to plan with them. Kissmetrics can help your business prepare for Chrome’s replacement to 3rd party cookies. 

How Can My Business Prepare for the Removal of 3rd Party Cookies?

If your business is using 3rd party cookies you’ll need to pivot to a new way of tracking advertisement performance. Kissmetrics has the tools to track user behavior and provide you with the data needed to keep tabs on your performance. With Kissmetrics you’ll be able to analyze your users’ behavior in any browser while keeping their personal data secure. 

Conclusion

Chrome removing its support of 3rd party cookies is a move intended to give users a more secure browsing experience. This can present a challenge to digital marketers who rely on these cookies to target ads to specific users. Ultimately, digital marketers will need to shift to Chrome’s replacement system when it is officially rolled out or implement a behavioral analytics tool like Kissmetrics. 

 

Sources:

Google Effort to Kill Third-Party Cookies in Chrome Rolls Out in April | PCMag.com

ID graphs: The Path to Identity Resolution | Martechtoday.com

Federated Learning of Cohorts | Github

What Is Affiliate Marketing And How Does It Work?

 

 

 

 

Exploring Affiliate Marketing

Before a consumer can buy a product or service they need to know it exists, making both business profile and customer attraction key considerations for pretty much every company. Affiliate marketing is one of the most common ways to achieve these ends, but how does it work?

 

What is Affiliate Marketing?

The online world has transformed business practices in many ways, from vastly increasing the potential of working from home through to collaborative business project software. One such area that has been altered substantially by the rise of the internet is advertising, and one new form of it is affiliate marketing.

Affiliate marketing functions by allowing third parties to make money from companies that benefit from web traffic and sales being generated in the direction of their products or services. A percentage of commission is given to the third party, which provides them with a strong incentive to encourage their readers or viewers to check out the advertising company.

The approach is endorsed and followed by numerous business sectors, from Amazon’s Audible business to online casin. This makes affiliate marketing an appropriate commercial activity for a broad swathe of firms.

Knowing the Audience

A critical aspect of making affiliate marketing work properly for all concerned is to know the audience and to ensure that a marketing message reaches those who might be interested in it. A spa treatment deal focused on a Formula 1 website may not necessarily hit the mark. However, a fantasy videogame that makes a strategic decision to advertise its wares on a blog or Youtube channel that explores subjects such as mythology, fantasy, history, or videogames is much more likely to find a receptive audience.

On a similar note, some bloggers/Youtubers are much better natural salesman than others. This can mean there’s better value with seemingly identical third parties (in terms of viewer/reader figures). Likewise, some audiences can be a lot more engaged. If an individual has a business model based on direct support via superchats (Youtube donations), bits (Twitch), and/or Patreon subscriptions, and PayPal donations then their audience, even if smaller in overall numbers, may be more willing to click through to help that third party out. At the higher end, major newspapers such as the Guardian have also made use of affiliate marketing.

Additional Features

It can also be the case that consumers stand to benefit directly by using affiliate links, typically through a discount. If a reader of a history blog sees a related product and can get a 10% price cut that clearly increases the chances of them clicking through and buying. Another method that can be used for either free-to-play games, educational streaming services, or even the likes of Audible (Amazon’s audiobook wing) are signup codes that offer some sort of bonus content, or free access for a month or two, or a free audiobook.

Sometimes third parties stand to make a little extra if a certain number of click-led sales happen, or codes are redeemed. This can also add some emotional weight to the draw as ardent supporters of the third party who are on the fence might go the extra mile to help out their favorite creator.

Advantages of Affiliate Marketing

Dan Dubey, chief of content and affiliate at Top10casinos.com, mentions that the biggest benefit of this approach is that the initial cost is essentially nothing, provided the third party is only paid for clicks or clicks converted to sales (the latter being better for the advertising firm). Nowadays, the latter is much more common, and clicks alone are rarely used as the metric.

Blogging may seem old hat compared to social media giants but blogs are still very popular and are a prime source of affiliate marketing. From the bloggers’ perspective, income from this source can be as high as six figures for the most successful.

Bloggers are far from the only third parties who can benefit from affiliate marketing, however. Youtube channels catering to specific audiences are also well-placed for this sort of commercial activity, and the same can go for e-mail lists/newsletters. By knowing the audience of a given third party, a business knows it has a far more receptive consumer base than the general population, increasing the chance of clicks leading to sales.

The Disclaimer

It’s important for both legal and moral reasons for the third party to be upfront about sponsorship or affiliate marketing because a key advantage online personalities have is a sense of personal connection with the audience. Being upfront and honest about advertising is completely fine, but if you recommend something, and stand to personally profit from clicks leading to sales, then not being honest about this can cause harm to your reputation.

How Successful is Affiliate Marketing?

This advertising model accounted for some 7.5% of digital spending among retailers in late 2016. The figures from the United States, in particular, tell the story, with year-on-year rises from 2015 until 2020, going up from $4.21bn in 2015 all the way to $6.82bn in 2020 (a more than 50% increase). As of 2017, 81% of firms were making use of affiliate marketing, showing that it is both productive and popular with businesses.

That brings us to the end of this concise consideration of affiliate marketing, which is an inexpensive and effective means of attracting customers, and one which is rising in popularity year-on-year.

How to Score the Health of Your Users and Accounts

Scoring user health may sound like medical advice, but it’s actually a vital part of understanding your customer base. As the name implies, users are assigned scores based on their behaviors and interactions with your product. Scoring individual users based on specific criteria for your company and industry may sound granular, but it can help you identify problem accounts before they leave. 

What is a User Health Score?

A user health score is the likelihood a user will achieve your desired result. That desired result could be a purchase, regular usage or upgrading depending on your industry and model.

So if you are scoring users based on the desire to keep them as lifetime users, they would have a higher score if they recently renewed their subscription.

Metrics Associated with User Health Scores

Examples of metrics by which you can score your users:

  • Product usage
  • User feedback
  • Marketing engagement
  • Website activity
  • User support cases
  • Product upgrades and renewals
  • Community participation

The Importance of Scoring

Scoring your users helps account managers and customer success teams monitor your company’s user base. User health scores can provide an early warning system to account managers when users are at risk of churn. High user scores across the board indicate that user needs are met, and your product is working well.

Additionally, high-scoring users are more likely to recommend your product or service to their friends and family, increasing your net promoter score (NPS). They may also recommend your company on social media. 

How to Create a User Health Score

Creating a user health score can be time-intensive so consider these important factors before delaying. The score usually indicates the likelihood of the user ending their account with you and switching to a competitor. 

You’ll want to keep in mind the speed at which a single user can significantly change their score and which metrics make up the score. 

Define User Health

This is a tricky step because user health can be subjective. You can take some of the guesswork out of it by using product engagement metrics, and how often the ideal user purchases your products or services. But understand there are always extenuating circumstances that cause users to behave unexpectedly. 

You can also consider other metrics like user feedback and engagement with social media campaigns, depending on your company and marketing strategies. The important thing is to decide whether the compiled metrics should be given equal weight in a score or if some are more illuminating than others. 

Select Predictive Metrics

Your industry and products or services offered will heavily impact the metrics that you value the most. Many companies include metrics like the ones listed above plus others such as user retention cost, net promoter score, and service renewals. 

Once you have selected your metrics, analytical tools like Kissmetrics allow you to measure user interaction with your website and are ideal for compiling data. 

Create a Scoring System

With your predictive metrics in mind, you’ll need to decide how much weight to assign each metric. For example, knowing that a user called to clarify installation directions and another user left a scathing review on your website shouldn’t be given equal weight during engagement scoring. A support case doesn’t necessarily mean your user will churn, but a nasty review likely does.

Develop a Health Score Scale

Depending on how you define user health, one type of scoring system might stand out as better for your purposes. For example, if you decide that user health is solely defined by whether a user has renewed your service within the past 12 months, a color code system would work perfectly.

We don’t recommend using a single metric to determine user health since it is a complex concept that requires multiple metrics working together to provide an accurate picture. 

Weighting and scoring various metrics will usually leave you with a numerical score for each user. 

Visualize User Health Score/Strategize

Now that you have a method of scoring your users, you should next decide how to present your method in a straightforward, meaningful way. We recommend consulting with your customer success and account management teams to see how they prefer to visualize the data. 

User health scores increase in value as you add more buckets. Increasing specificity makes it easier for account managers to know at a glance how users score. We list some examples of user health scoring systems in the next section.

After you’ve selected appropriate buckets for users, you’ll need to strategize with your teams. Choosing strategies to assuage user dissatisfaction is crucial for retaining users, although individual strategy will depend on your company’s industry. 

This might look like offering unhealthy users another onboarding, discounts, or a free trial for a higher tier of subscription. 

Examples of User Health Scores

There are a variety of ways to score user health. Depending on which is the most meaningful to your company or, if there’s an industry standard, you’ll likely choose one of the following common examples of user health scoring systems. 

Percentage Scale

A percentage scale is the most specific of the examples listed here. For example, an account manager automatically knows that a user who has scored 32% is more dissatisfied than a user with a 45% score. 

This makes prioritization easier, although it provides many buckets of data that might be harder for customer success and account management teams to parse quickly. 

Color Code

Many companies prefer to use the stoplight system, which simplifies user scores into Green, Yellow, and Red. While this system is easy to remember, it might make things too simple. 

A user who has renewed in that timeframe would be “green.” An account manager who had persuaded a client not to cancel would score them “yellow,” and a user whose subscription had lapsed would be coded “red.”

Account managers would know to prioritize users marked Red, but there aren’t degrees of Red, making it difficult to distinguish between levels of dissatisfied users.

Alphabetical Scale

The alphabetical scale works similarly to the American grading system in school. Users are scored with a letter between A and F, with A being the highest score and F being the lowest. 

Like the color code, the alphabetical scale is easy to remember and gives account managers an instant visual of how they should interact with a user’s account. 

Ranking Scale

As the name implies, the ranking scale compares each user’s score to every other user’s score and creates a ranked list. This can come in handy when you’re looking for the lowest-ranked users to provide some kind of intervention and prevent churn. It might also be an opportunity to reward high-ranking users with a promotional discount. 

The downside to the ranking scale is that, like the percentage scale, it doesn’t inherently provide convenient buckets for customer success and account management teams. Instead, they have to do some reading and sorting to find the valuable information. 

Other Metrics That Indicate Overall Company Health

In addition to the metrics listed above, the following metrics can also give you a good idea of your company’s general wellbeing:

  • Churn Rate – a measurement showing the number of users who stop using your product or service over a specified period.
  • Average Revenue per Account – the total revenue earned during the specified period divided by the number of active accounts.
  • Net Promoter Score – surveying users on how likely they are to recommend your company to a loved one on a scale of one to ten (with one being the lowest and ten the highest score).
  • User Retention Cost – the total needed to persuade a single user to continue purchasing your products.
  • User Satisfaction Score – surveying users on how satisfied they were with their experience with your company or with your company’s product on a scale of one to ten (with one being the lowest and ten the highest score).
  • Customer Lifetime Value – the total amount a single user is expected to spend on your products or services throughout their relationship with your company.
  • Monthly Recurring Revenue – the average revenue per account per month multiplied by the number of accounts in a given month. This is an estimation of how much revenue your company should expect to earn each month. 

Conclusion

User health scores provide essential information for companies to see whether they meet their customers’ needs. By combining a range of metrics to measure how users interact with your company, you can entice dissatisfied users to stay and decrease your churn rate by planning out appropriate strategies with your account managers and customer success teams. 

 

Sources:

How to Score User Health | User Success | Gainsight.com

Why You Need User Health Scoring (& How to Do It Right!) | Wordstream.com

Monthly Recurring Revenue Definition | Zuora.com

Cohort Analysis: Beginners Guide to Improving Retention

Brand awareness is great, but experienced business owners know that the key to success isn’t about attracting new customers; it’s enticing existing customers to return. Cohort analysis is one way to measure how long users interact with your website or product before leaving and can provide valuable insights into areas where you need to improve features. 

What is a Cohort?

A cohort is a group of users who share common traits based on an event you track. So, for example, you could segment users who visit your website over a period of six months, by which week they visited. 

Why is Cohort Retention Important?

Simply put, cohort retention is important because it’s more expensive to acquire new customers than it is to keep your current ones. To know if you’re retaining specific cohorts, you need to track their behavior. This will give you two types of information: a) it will tell you whether or not you’re retaining users at all or whether new users are masking a major churn issue, and b) it will give you insight into how to keep those cohorts happy. 

What is Churn?

Churn is when a customer decides to stop using your product or services. This might mean they cancel a subscription, cease logging in, or stop buying from your company. A high churn rate is a red flag, even if you continue to reel in plenty of new customers.

What is Cohort Analysis?

Cohort analysis is the process of segmenting your website visitors or users into groups based on their characteristics or interactions within a specified time. Everyone in a cohort has made the same decisions and triggered the same events within the period or they share a trait such as a geographic location or belonging to an age group. To conduct cohort analysis you will put your parameters into your product analytics tool then check the data regularly for trends. 

The purpose of this analysis is to track cohort behavior over time. You’ll see whether you have a high churn rate among existing customers, or perhaps just those that come in on a trial offer. You’ll be able to see whether your consistent MRR reflects a good product or all-star sales and marketing teams (and perhaps a product with problems). 

Cohort Data Types

There are two different types of cohort data: acquisition and behavior. 

Acquisition cohorts are based on when a user initially created an account or first used your product. They provide information about how long a user continues to interact with your product or service after they start. Knowing when your users are leaving your software is essential to see where you need to improve. For example, if users are leaving after a day or two, that could mean they are having difficulty with onboarding or using your software or product. To solve this, you could provide more explicit instructions or offer onboarding assistance. 

Behavioral cohorts are based on behaviors that users have or have not performed within your software. For example, they can be people who visited your website but didn’t sign up for an account or users who signed up for your mailing list but didn’t purchase anything. If you monitor a cohort who visits your website, creates an account, and signs up for the mailing list within a small time frame. You’ll see how long they continue to log in to their account afterward or if customers who create accounts are more likely to purchase your products. 

Cohort Analysis Example

As we noted above, a standard cohort analysis looks at visitors to your website, both new and returning. Over six months, you can measure the number of new visitors who sign up with your website and how many of them returned to the website within that time. 

For example, if you begin measuring on the first day of May, you can see the percentage of new visitors returning in June, July, August, etc. This information can show you how long the average user spends utilizing your product whether it has legs. 

How to Do Cohort Analysis

Performing a cohort analysis requires four steps: 

  • Creating a question – What do you want to know about your users? 
  • Selecting the metrics – Do you measure how many consecutive days they log in to their account? The length of time between creating an account and purchasing a product?
  • Designing cohort identifiers – Are you segmenting your cohorts based on user behaviors or time?
  • Running the analysis – Pulling the data and visualizing it to find the answers to your initial question.

How to Build a Cohort Analysis Report Within Kissmetrics

In Kissmetrics, we offer various parameters to maximize the amount of helpful information in your cohort analysis report. The first step is to specify your date range for people performing the first event. Then you select the events to monitor, like visiting your website, logging into their account, utilizing your software, etc. 

The next option specifies the period of each cell. It lets you narrow the scope of the question, “After doing Event 1, how many hours, days, weeks, or months did it take these people to do Event 2?”. Then, choose whether you want to group people based on time or property. Time looks at when people performed the first event—property groups based on a property you set beforehand.

How to Use Cohort Analysis Data to Improve Retention

Essentially, cohort analysis watches how groups of people interact with your product and how those interactions change over time. Understanding the staying power of your product and how long users interact with it can help you determine where you need to improve it to increase user retention. 

Uncover Friction Points

Acquisition cohort analysis gives you the data to map out a retention curve. So, you can see approximately how many days, weeks, or months your average users stay connected with your product before churning. Typically, the most significant drop-off will be within a few days of starting use since many users may be casual visitors or may not want to continue dedicating time and effort. 

However, suppose the initial drop-off is larger than expected. In that case, it may reveal a friction point where customers may not be getting the information they need to set up the app or to utilize your product’s basic functions and are quitting out of frustration. 

Study Which Actions Drive Retention

Behavioral cohort analysis dives into the “why” of churn. If users who don’t interact with one of your product’s main features are the ones who quit within the first week, that’s an indication that they either need to be prompted to use it, or taught how. 

Alternatively, if users trying to pay with cryptocurrency regularly appear to cancel their subscriptions after the first month, that indicates your payment system may not be working correctly or is not optimized for that type of payment method. 

Benefits of Cohort Analysis For Your Business

Cohort analysis provides a variety of benefits for your business by providing deep insights into your user actions and behaviors. We explore a few of them in the sections below. 

Increase Customer Lifetime Value

Cohort analysis helps to establish your customer lifetime value, or CLV, since it gives you an idea of how many customers continue to engage with your company. Customers often spend the most money during their first month, but you can determine why customers decrease their spending and then take actions to potentially increase their CLV by addressing those issues found in a cohort analysis. 

Identify Loyal Customers

Cohort analysis doesn’t have to focus solely on the users who leave; it also identifies the people who stay. You might find that visitors who spend a week with an active account before purchasing your product are more likely to continue engaging with it for a long time, as opposed to visitors who buy on the same day their account is created. 

Improve Product Testing

When you roll out a new update, cohort analysis can show the percentage of users who decide to leave within a given timeframe after the update was released. Thus, you can test new features, bug fixes, and updates by monitoring when customers leave. 

Conclusion

Cohort analysis allows you to obtain detailed insight into your conversion funnel, how long users interact with your product, and when they start leaving. This information sheds light on actions you should taketo improve your product or website.

 

Visit Kissmetrics for more information about cohort analysis reports and how your business can benefit from them.

 

Sources:

  1. Cohort Analysis: Beginners Guide to Improving Retention
  2. Cohort Analysis: The Key to Improving User Retention for Your App
  3. Cohort Analysis: An Insider Look at Your Customer’s Behavior

The 5 Most Important Onboarding Metrics to Measure

One thing all businesses have in common is that new users are required for growth and long-term success. But new users don’t often know all the details of your products and services so you have to educate them as to their benefits through a process called onboarding. The onboarding process looks different for every company and industry so you might have to iterate onboarding until you have the process that sits at the nexus of cost-effective and customer satisfaction.  

In order to make your onboarding process as efficient and effective as possible, it’s important to gather data to clarify what needs to change.

What is User Onboarding?

User onboarding is the introduction of users to your business and products. In this early phase, users will learn about your offerings and what value these products can bring to them. 

Onboarding also includes teaching the users how to navigate and implement your products and how to maximize their value. This can include helping them get products or services up and running or helping them transfer over from a competitor’s set of products or services.

Because this is the first phase in which users will start to interact with your business, it’s crucial that your onboarding process is well thought out, as it sets the foundation for their relationship with your business. The user onboarding phase will also consist of answering any questions or concerns your users may have while you guide them through the process of adopting your product or services. 

In a nutshell, user onboarding is the process of taking new users and transforming them into existing users. 

Why is User Onboarding Important?

First impressions are key when introducing users to your product or business. A poorly executed onboarding process is one of the main reasons users leave and move on to competitors. A well-executed user onboarding process will ease the burden of user retention and will increase overall user satisfaction. 

Another reason user onboarding is important is that it is a great opportunity to teach the users about your company’s different offerings and potentially upsell. Potential users may have arrived at your company because of one product or service, but that doesn’t have to be the only product or service they end up choosing. 

During the user onboarding process, you may discover that different products or services fit your users’ needs. Selecting the appropriate products and services for your users will help them get more value from your company. Learning the best fit for your users during the onboarding process will lead to higher satisfaction and consistent growth for your business

How Long is the Onboarding Process?

The length of the user onboarding process depends on your industry and business model. For a company selling simple products and services that are somewhat self-explanatory, the onboarding process will be simple and straightforward. Some new users may be looking for a quick and easy order process that will save them time. In that case, your onboarding process should be fast and efficient, providing the most value to the users. 

For companies selling complex products or services, the onboarding process should be detailed enough to give the users all the necessary details. The onboarding process should teach them the proper ways to use your products or services which will increase the likelihood of user retention. 

How is Onboarding Measured?

It’s critical you track the appropriate metrics for your business and situation.  Some of the most important onboarding metrics are:

  • Completion time
  • User progression
  • Product adoption rates
  • Escalation response time
  • User response rate

Completion Time

The length of time it takes your users to complete the onboarding process is measured as the completion time. A good completion time will vary depending on your product and service lineup but a good rule of thumb is the quicker the better. You want to get people using your product or service while they’re still excited about it. 

Additionally, a long completion time could mean a complicated onboarding process that may lead to lower user satisfaction. For example, a long completion time may result in a low completion rate, which in turn leads to a low growth rate. 

By contrast, a low completion time may mean users are not getting enough information during the onboarding process. This could also lead to lower user satisfaction and poor user relations. 

User Progression

User progression is a metric used for tracking a user’s progress during the onboarding process. If your company’s onboarding process is complicated or your user retention rate is low, user progression would be useful to track. 

Understanding where users are in the onboarding progress can help identify bottlenecks in your process. Keeping your onboarding process as efficient and easy for your users as possible is a smart approach to grow your business. 

By monitoring your user progression metric, you get a clear sense of how smooth your onboarding process is. 

Product Adoption Rates

When analyzing the number of users who successfully adopt your product, you are looking at the product adoption rate metric. This metric is a calculation of the percent of users who go from being one-time users to repeat users of your product. 

While one-time users may provide some quick wins for your company, they are usually not the users that will lead to the long-term success of your company.  Product adoption rate is critical for subscription-based businesses looking to convert users after free trial periods. Subscription-based companies need active users in order to maintain their user base and product adoption rates measure how many users are being converted to active users. 

Escalation Response Time

When your users are having an issue and open a case or ticket with customer success, it’s critical that their problem is resolved quickly. Escalation response time is a measure of how long it takes customer success to resolve or close tickets that have been escalated (typically beyond the first level of support). 

The first level of support could be a FAQ page or automated chat support, while the second level of support usually includes some type of human interaction (either chat or phone). 

Escalation response time is a useful metric to track if you have concerns about your customer success performance and how it affects onboarding and user adoption. This measure will be different for each company because it hinges on how well your customer support system is set up.

User Response Rate

User response rate can give you a real look at the percentage of users invested in your products. 

When sending out surveys or feedback forms, the user response rate is the percent of users that respond to your inquiries. While it’s essential to track metrics about your user’s behavior, it’s also important to get real feedback from users about how your company is performing. 

The user response rate indicates how many users are currently active and how much they value your product. If users are not responsive to your company’s attempts to reach out for feedback, they may not be invested enough in your products or services. 

How Do I Track User Onboarding Metrics?

There are many options when looking to track user onboarding metrics. Gathering data and understanding how to set up metrics that align with your business model is key.  

It’s important to monitor your onboarding performance to grow your company and increase user satisfaction. Kissmetrics has excellent solutions for tracking onboarding metrics for your online business. 

Why Do User Onboarding Metrics Matter?

User onboarding metrics provide insight into what it’s like to become a new user of your products or services. Maybe user onboarding is a strong performance area for your company, and you’re looking to maintain its positive impact, or perhaps user onboarding may be an area your business is struggling so you need to understand where the process can be improved. 

User onboarding can be a complicated process to track depending on your business model. Despite the difficulties, user onboarding is a critical process for any company looking for long-term success. The new user onboarding process sets the tone for what the experience of being an active user for your company will be. 

Having the right metrics in place is critical to make sure that the first impression your business makes is the right one. 

Conclusion

User onboarding metrics provide essential information on how your company first greets its users. Onboarding can be a long process depending on your products and services, making it vital that the process is smooth and valuable for your users. Ensuring your user onboarding process sets a good tone and creates a positive experience is a key to growing your business and creating positive user feedback. 

 

Sources:

Customer Onboarding | Gitlab

User Onboarding: Not Just for HR and Growth Hackers | Huffpost.com

Growth Hacking: Creating a Wow Moment | For Entrepreneurs

The Importance of Understanding Qualitative Data

Qualitative data is a non-numeric measure of data best used for describing characteristics or qualities. Qualitative data is most frequently obtained from surveys, feedback forms, focus groups, or other forms of personal feedback. This data can also be recorded from a third-person perspective, such as recording someone’s reaction to a new product. 

Qualitative data is important for ecommerce and SaaS because it’s a way to measure customer feedback and product reviews. Kissmetrics can help you organize your data collection and break down your data types.

What Is the Difference Between Qualitative and Quantitative Data?

Quantitative data is a numeric measure of data. A good example of quantitative data would be the number of sales recorded over a specific period of time, the number of new customers over a period of time, or the churn rate. This type of data is objective, meaning it is not based on opinion and is a fact that can be measured in quantity. 

The main difference between qualitative and quantitative data is that qualitative data is non-numeric. 

Both types of data are important when measuring the performance of your company or a specific product. For example, solid quantitative data is important for measuring financial data or sales data, which are good indications of company growth. 

On the other hand, measuring qualitative data such as product feedback or customer satisfaction is needed to make sure your products are successful in your customer’s eyes.

How Can I Collect Qualitative Data?

Collecting qualitative data can be more of a challenge than collecting quantitative data, but qualitative data is essential for businesses hoping to gather customer feedback. If you’re struggling to collect qualitative data, Kissmetrics has the experience to help you. Some of the different options for collecting qualitative data include:

  • One-on-one interviews
  • Focus groups
  • Observation
  • Longitudinal studies
  • Case studies

One-on-One Interviews

Conducting personal one-on-one interviews is a proven way to get good qualitative data.  Interviewing a current or potential customer can provide honest feedback about your products or company’s perception. 

While one-on-one interviews may seem more time-consuming, virtual interviews are common and much easier to arrange than in-person interviews. It’s good to have a mix of your typical users interviewed for feedback on your product performance in order to gain information about a variety of demographic groups. 

It may also be helpful to interview potential customers to understand their current product choices and why your product hasn’t been used. If possible, one-on-one interviews with former users can provide valuable feedback on why your product did not work for that user. 

The qualitative data from interviews is important to get a view of the perception individuals have of your products.

Focus Groups

Focus groups have been used in several different fields to collect qualitative data from small groups of people. For marketing purposes, focus groups will be guided by a proctor who asks questions about companies and products in your field of interest. This format promotes free and open discussion about topics concerning your company and products. 

Focus groups can be used in the early phases of product development when companies are trying to get feedback on a new product or concept. You can also use focus groups to test product usability. Having a focus group test a website’s usability can get valuable qualitative data feedback for your developers.

Observation

Observing your customers as they use your products is another way to get qualitative data.  This method requires the observer to collect data and record interactions between the user and the product. Observing users without any dialog provides a realistic view of what users struggle to accomplish when using your product. 

Some companies will go so far as to not give the customer any instructions and simply set the product in front of them to see what they do. Do they read the instructions insert? Do they navigate to the “Help” section? Do they immediately start using the product? This helps companies see how new users react to a product the first time they encounter it. 

Your products must be simple and intuitive for new customers unfamiliar with their layout. Observing where the user’s eyes go and how they handle confusing situations can help designers create friendlier layouts. Qualitative data from observation can transform your products into well-thought-out solutions.

Longitudinal Studies

Another way of observing user behavior on a larger scale is a longitudinal study. Often, longitudinal studies involve following the same people or users over an extended period of time to track their behavior. 

These types of studies are often used in the medical field to track the long-term success of medication or surgeries. For tech companies, a long-term study of their users and their habits can help organizations to understand the impacts their products have on users. 

Longitudinal studies can reveal the habits of users, which could help developers shape new features. By knowing the patterns users tend to follow, developers are able to create software that is designed with these habits in mind. If you’re looking to understand what frustrates users, longitudinal studies can also be insightful. Perhaps a situation users didn’t put much thought into at first glance can become a real headache after long periods of use. 

Longitudinal studies may require the most effort but can yield beneficial results.

Case Studies

When looking to do a deep dive on a particular topic or situation, a case study may be the best option. Case studies for websites may be a detailed look at an issue that doesn’t have an immediately obvious solution. 

It may involve observing a small group or a large segment of your user base, but it’s best to have the scope of the issue narrow. A case study on why new customers aren’t using a particular feature may help understand how you can improve the product. 

At the end of a case study, you may only have a theory or hypothesis because case studies do not always lead to a concrete solution, but your team is likely to be headed in the right direction. 

Case studies can also provide a good platform for advertising your product. By showing potential users a real-world problem and how your product solved it, users can see the firsthand value of your product. 

The qualitative data gathered from case studies can provide a detailed look at a specific situation you need to be analyzed.

How Can I Analyze My Qualitative Data?

Once you’ve collected your qualitative data, it needs to be properly analyzed in order to be usable. Two ways you can analyze your data are deductive analysis and inductive analysis.

Deductive Analysis

When performing deductive analysis, you start with a theory and try to prove it. An example could be “new users are having trouble completing a setup wizard.” From that theory, you would form a hypothesis about why the problem is occurring, such as “the final questions on the wizard are confusing to new users.” 

From that hypothesis, you could then collect data around the issue that your users are experiencing. The first step would be to gather feedback from new users completing the setup process. Once you have the data relevant to the hypothesis, you can then analyze and evaluate the results in order to improve your product. 

Perhaps you find that new users don’t understand the wording of the final questions in your setup process. Based on this information, you could reword your final questions to make them clearer 

While deductive analysis can be helpful, you must start with a theory in order to use this method. If you don’t have a theory, then Inductive analysis is the proper way to analyze your data.

Inductive Analysis

When you have little to no idea regarding an issue you want to analyze, using inductive analysis is more practical. Inductive analysis is the process by which you would form a theory regarding a situation. 

The first step is to start with an observation such as “a new user did not complete our setup process.” From this observation, you could look for patterns. For example, you might observe that half of the users in that focus group did not complete the setup process, which would indicate a pattern. After a pattern is established, you can then form a theory like “the users did not understand the questions in the setup process.” 

This form of analysis is limited because you can form theories, but you need more data to prove or disprove that theory. After using inductive analysis to form your theory, you could then begin to solve the issue using deductive analysis.  

Why Is It Important to Understand Qualitative Research?

When dealing with issues in your business, a numerically based report cannot always tell you the root issues in your products. The voice of your customers will be represented in qualitative data, so it’s important to understand what is being said. 

 

Researching issues is a process that takes time, so understanding the best route for your business is key to being efficient. Kissmetrics can make it easy for you to collect and understand your qualitative research.  

How Can Qualitative Research Help My Business?

Qualitative research is needed to track and resolve real issues your customers may face when using your product. Customer issues need to be tracked and analyzed, and that data is often collected through qualitative research. 

It’s also important to research how to grow your product and reach out to new customers. Gathering feedback from people not using your product will help you see ways to expand your footprint in the market. Researching the voice of users and non-users is a great way to get their perception of your products.

Conclusion

Understanding qualitative data is necessary for companies looking to see what their customers think of their products. This non-numeric form of data goes beyond sales numbers and conversion rates to look at what customers say and feel about your products. Make sure it’s something you take the time to collect and analyze to improve your product delivery. 

 

Sources:

  1. All Guides: Data Module #1: What is Research Data?: Qualitative vs. Quantitative | Libguides.com.
  2. Qualitative vs Quantitative Research | Simplypsychology.org
  3. Case Study Method in Psychology | Simplypyschology.org

The 6 Best Customer Retention Strategies to Maximize Customer Lifetime Value

Improving customer retention should be at the top of every company’s to-do list. After all, it’s much easier to keep existing customers satisfied than it is to find and attract entirely new ones. Customers who’ve already taken a chance on your company are a valuable asset and smart companies leverage that existing relationship. 

If you’re ready to explore how customer retention strategies can increase your company’s profits, Kissmetrics has all the information you need here. 

What Is Customer Lifetime Value?

Customer lifetime value or CLV is a metric that measures the amount of profit your company makes from a single customer. To estimate a customer’s lifetime value, you’ll need to do a few calculations. The first one is to average customer expenditure per visit. Then, calculate the average number of visits or purchases per year. Multiply those numbers together to get your customer revenue for one year.

You’ll then need to predict the number of years you expect your customer to stay with your brand. Multiply that by your original number. Depending on what you’re selling, those purchases will ideally continue for many years to come.

Why Is Customer Lifetime Value Important?

Studies have shown that it is more cost-effective to retain existing customers than to attract new ones. The higher your CLV is, and the more customers you retain, the more profitable your company will be. 

Ideally, you would want a customer to purchase your products for the rest of their life. That’s unusual, but not unheard of, depending on your industry and the products you’re selling.

How Can Customer Retention Help Maximize Customer Lifetime Value?

Your CLV is innately tied to your customer retention. If customers only use your services on average for around a year before churning, your CLV will be lower since it only encapsulates purchases made within that year. 

However, if you increase your customer retention and see people staying loyal to your company for longer, they’ll have longer to purchase your products. 

How Can Companies Increase Their Customer Retention?

Increasing your customer retention is crucial for saving on customer acquisition costs and optimizing your profit. There are various ways for companies to increase their customer retention, as we address in the sections below. 

Increase Repeat Customer Rate

If you’ve noticed most of your customers only use your service for a few months, you’re likely losing money since that won’t cover the customer acquisition costs. However, if you can encourage customers to pay for an annual subscription instead of a monthly one, you’ll likely increase your repeat customer rate since your customers will have more time to experience the benefits of your service.

One way to entice customers to sign up for an annual payment plan is to offer a discount when compared to the monthly plan. Even with the discount, ensuring that customers stick around for longer and decreasing your churn rate is still more profitable than having customers churn every few months. 

This is especially true if you’re constantly introducing new features or offer a comprehensive service plan. Often a few months isn’t enough for a customer to fully experience everything your company has to offer. Still, by staying in the plan for a full year, customers will be more likely to renew when their subscription expires. 

Increase Purchase Frequency

Another way to increase CLV is to require a customer to purchase your products or services more frequently. An example of this is rolling out your software in pieces and delaying the pieces. By separating services or features into separate packages, your customers will have to purchase your updates as they come out which increases purchase frequency.

Your company could develop and release a new version of your product each year. If you can improve upon your product, you’ll entice some existing customers to upgrade whenever you release something new, instead of waiting for their old product to break. 

Increase Average Order Value

Upselling is one of the oldest tricks in the book, and if you can routinely upsell your customers, their CLV will naturally increase. For example, if your company provides a streaming service, you could pre-set the boxes checked for additional channels. A customer would need to physically uncheck the box in order to not have extra channels bundled into their channel package.

Since the box is pre-checked, the customer may opt to pay the additional cost and complete the purchase. By increasing their average order value, streaming services increase a customer’s lifetime value. 

Use Email and SMS Retargeting

While many companies engage with their existing customers via email or texting campaigns, you’ll want to ensure that your messages aren’t regarded as spam. To do that, you should create valuable content for your customers. This can come out of customizing or personalizing your messages. 

It doesn’t have to be completely personalized, for instance, simply reminding customers how much they’ve saved by subscribing to your loyalty program might be an incentive to stay loyal to your company. Use the opportunity to explain the benefits of your company that your customer has already gained, instead of simply advertising your next big hit. 

With Kissmetrics’ email tracking tool, you can monitor the number of customers who open your email and click through to the URL you provided inside. That way, you can see whether your current email campaign is successful or if you need to tweak some things. 

Use Customer Accounts

When you offer customer accounts, you enable a personalized experience with your company. Whether that means offering occasional promotional discounts on products, adding them to your email list, or saving their information for faster checkouts in the future, the majority of customers will feel more engaged with your website if they can log in to their account. 

Customer accounts are also the perfect place to add recommendations based on previous subscriptions or purchases. Although some products are fine on their own, many require additional components. For example, if you are selling clothes and a customer has a shirt in their cart or has recently bought a shirt, your website could recommend matching pants or a jacket. 

Improve Customer Support

One of the reasons that customers churn is due to poor customer support. Depending on your industry, customer support might not be crucial. But if you offer SaaS or are in the tech space in any way, you should ensure that your customers have plenty of ways to contact customer service/success. 

Waiting on hold for several hours and having someone answer questions quickly and efficiently through a Live Chat can be the difference between a customer churning and staying loyal to your company. 

Additionally, ensure that your support team is knowledgeable and knows who to contact if they can’t solve a customer’s issues. Apple is well-known for having excellent customer support in the form of the Genius Bar in their stores, and that makes a big difference to customers who are already frustrated with something going wrong. 

How Do I Measure Customer Retention?

Kissmetrics can measure customer retention by monitoring churn rate, the opposite of customer retention. You can also look at the number of active users in a given timeframe and subtract the number of new users to see how many users are returning customers. 

You can also measure customer satisfaction through surveys like the Net Promoter Score or NPS. It asks customers a single question: How likely are you to recommend our company to a friend or family member? They’re given the options of one through ten, with one being the lowest score and ten being the highest. 

Anyone who rates your product one through six was likely dissatisfied with your product and is classified as a detractor, while anyone who ranked nine or ten is a promoter. Promoters are most likely to become return customers. After subtracting the detractors from the promoters, you should know the percentage of customers who plan to purchase again. 

How Do I Know Which Customer Retention Strategy Is Right for My Company?

Depending on your industry and whether you’re selling a product or a service, any or all of the suggestions above might be appropriate ways to increase your customer retention. With Kissmetrics, you can learn more about your customers, see what they want from your company, and rise to meet those expectations. 

Conclusion 

Determining the right customer retention strategy requires you to know your customers and understand what they want. When you know your customers’ needs, you can work to fulfill them and continue to appeal to those users by reminding them periodically that you value their purchases. By retaining your customers, you’ll see an increase in company profits and decreased customer acquisition costs. 

 

Check out our website for more information on the metrics for monitoring customer retention and how we can help you improve. 

 

Sources:

  1. 12 Proven Tactics to Increase Your Customer Lifetime Value (CLV) | Retently.com
  2. 10 Tactics For Increasing Your Customer Lifetime Value and Loyalty | Neil Patel
  3. How to Optimize Customer Lifetime Value (CLV)—15 Effective Tactics That Every Marketer Needs to Know | Useinsider.com

Building and Optimizing Your Data Ecosystem

You’ll find that product ecosystems are not static and centralized like data environments typically are. Instead, they incorporate an encompassing analytics platform that your entire organization can use to track user groups and monitor performance metrics by automating analysis from multiple data sources. 

As we explain below, the modern data ecosystem is formed by the complex interactions of tools and applications that both gather and organize data into actionable information. 

What Is a Data Ecosystem?

A data ecosystem is the sum of a company’s infrastructure and applications that work together to collect and organize data. These applications collect and filter information for businesses to better understand their users, website visitors, and audience members. The best way to build a functional data ecosystem is to start with a product analytics tool and build out from there. 

The Kissmetrics product analytics tool focuses on organizing data into reports so that your teams can extract useful insights. When you build your tools around the idea of gathering actionable information and measuring your progress through KPIs, you’ll save yourself time and effort in the future.

Since it’s an ecosystem and not an environment, your applications and infrastructure must be designed to evolve over time to accommodate your business’s changing needs. Because every business has different scopes and goals, there is no single solution for a data ecosystem. The applications and cloud services making up the infrastructure must be flexible to allow for future modifications and improvements, thus allowing your company to grow. 

What Are the Main Components of Big Data’s Ecosystem?

There are three major components of the data ecosystem: 

Data Sources

As the name implies, the data sources are where your data is coming from. How is your infrastructure gathering information, and where does that data originate from? This component also includes linking the disparate data to draw meaningful conclusions in the analytics step. 

Data Management

Data management includes integrating applications, the storage of data, and how your infrastructure processes the data into readable reports. Without the ability to properly store and access data in the future, capturing it becomes all but meaningless. 

Data Analytics

Data is virtually useless without critical thinking and proper analysis. Otherwise, you’re stuck with massive amounts of numbers that don’t translate into any actionable strategies. Data analytics is the process of drawing insights from reports and making sense of the numbers. 

Analytics tools can help you understand why certain users are at risk for churning and others remain loyal to your company. 

How Do I Create a Data Ecosystem?

There are three major aspects to consider when it comes to creating your company’s data ecosystem: 

Infrastructure

Your data ecosystem infrastructure is the foundation of everything else. Imagine it as the ground and the rivers for your forest to grow out of. You can’t have any trees, grass, or animals without soil and water. Your infrastructure stores collected data in a database as one of three subtypes:

  • Unstructured data – unorganized data like text responses to a survey. 
  • Structured data – organized data like you might find in an Excel spreadsheet listing the total number of purchases made.
  • Multi Structured data – data arrives from multiple sources that can be structured or unstructured. 

Analytics

Think of analytics as the monkey who swings between the branches of your applications in the data ecosystem. Analytics helps you tie everything together and make something useful out of the data. 

A monkey takes what it needs from trees, picking fruits and creating a tasty meal. As the analogy goes, your analytics tools will grab the data it needs to pull insights about your products, like which users commonly purchase them. 

Applications

The applications are the trees of your metaphorical forest of a data ecosystem. The trees give the forest shape and form. Applications allow teams to access data across multiple platforms and utilize the data as it comes in. 

How Do I Optimize My Company’s Data Ecosystem?

Optimizing your company’s data ecosystem will require patience and time as every company has different goals and a different type of data ecosystem. In the meantime, there are a couple of ways to keep things running smoothly. 

Democratize Your Data Science

One of the major benefits of good data management is the ability for everyone to access reports and insights. When just a few people have access to the data, it can cause a bottleneck of information flow. Purchasing a large number of licenses for your data analytics software eases that bottleneck and helps your teams work collaboratively and efficiently. 

Consider Data Governance

Considering the enormous scope of gathering data and analyzing it, your company needs to set rules and boundaries for everyone about collecting, storing, protecting, accessing, and using data. 

These rules shield your company from liability and help you comply with any federal laws about privacy protection and how you’re able to leverage personal data. 

Why Do I Need a Data Ecosystem?

With a solid data ecosystem, companies can make fact-driven decisions about operations management, pricing, and marketing campaigns. All products, but especially digital ones, record how a user interacts with your company’s products and services. Data can help provide valuable insights into why users behave the way they do. The sections below dive into the specific benefits of data ecosystems for businesses. 

Increases User Engagement

When users feel like their voices are being heard, they’re much more likely to start a conversation. User feedback provides some of the best information about your company. With a data ecosystem in place, users can discuss their reactions to changes in your website, products, services, or advertising. 

Identifies Hidden Data Relationships

It’s not always easy to see the relationships between certain factors. Which demographic factors influence whether or not a visitor is more likely to become a user? Who should you be marketing your company to? Why do users leave your website without following through with a purchase? 

The Kissmetrics product analytics tool can uncover hidden relationships between data points that it would take you a long time to see on your own. 

Notifies Teams of Changes

With the ability to track user reactions and interactions with your products or services in real-time, you can monitor how they respond to updates or changes in everything from your company’s advertising strategies to features. This way, you’ll know if you take a step in the wrong direction and can work to change it to suit your clients better. 

Tracks Conversions and Marketing Funnels

Watching your marketing funnels to ensure that potential users are directed through the process of completing their purchase is the heart of every business. With Kissmetrics in your data ecosystem, you can track your conversion rates and see what works for your audience and what doesn’t. 

Increases User Retention

The flipside of knowing when users react poorly to new updates or features is that you can incentivize users to continue using your products and build company loyalty by monitoring your KPIs with Kissmetrics. 

Knowing what your audience wants is the best way to satisfy their needs and keep them coming back for more. 

Conducts A/B Testing

With A/B testing, you can monitor the difference in user engagement for two different versions of the same content. This can be done by comparing two email campaigns with different wording, the same social media post made on separate platforms, or similar concepts. 

Integrates with Other Applications

Automating manual processes saves your employees time and overhead costs that could be better spent on running your business and improving your products. Everyone has heard that, but one of the best ways to facilitate that automation is to connect your applications so that you don’t receive everything piecemeal.

By integrating your applications into a central organization system, you ensure that everything is working and sending you the data to be compiled into neat reports. These reports make it easier to see the big picture and form strategies. 

Additionally, integration allows multiple teams to all have access to the information at any time. 

Conclusion

Understanding your company’s data ecosystem is the first step towards segmenting your user base and knowing who your users are. With that knowledge, you’ll be able to effectively market your product or service to a broader audience with similar needs and customize your company to be what your clients want to see. 

Contact Kissmetrics to get started building your data ecosystem today.

 

Sources:

  1. What Is Unstructured Data & How Can You Analyze It? | Monkeylearn.com
  2. Janev V. (2020) Chapter 1 Ecosystem of Big Data. In: Janev V., Graux D., Jabeen H., Sallinger E. (eds) Knowledge Graphs and Big Data Processing. Lecture Notes in Computer Science, vol 12072. Springer, Cham. https://doi.org/10.1007/978-3-030-53199-7_1
  3. 5 Key Elements of a Data Ecosystem | Harvard Business School Online

Kissmetrics vs Mixpanel: What Are the Differences

Kissmetrics and Mixpanel are classified as product and marketing analytics tools. They can help you track your customers and how they interact with your products, as well as the success of your marketing efforts and ecommerce site. Their purpose is to provide your company with the necessary information to anticipate your customers’ changing needs as well as outside market forces, so you can prioritize what gets fixed and built and better target your advertisements. The end goal is to reduce churn, increase Customer Lifetime Value (CLV) and improve conversion rates. However, there are plenty of differences between the two tools. 

Here we’ll give you an accurate comparison between our services and our biggest competitor, Mixpanel. 

Common Features

Both products offer several standard features like tracking the number of page visitors, showing you who’s purchasing your product or services, and other information about your marketing funnel and the subsequent conversion rate. 

The Differences

Despite the similarities, there are many major differences between Kissmetrics and Mixpanel that you should consider when deciding which is better for your company. 

Kissmetrics has routinely been rated the easiest behavioral analytics tool to use with a straightforward interface and a small learning curve. Geared toward small and medium businesses, our tool makes it easy to get the two or three reports you really need without a bunch of other noise. It’s also cheaper than Mixpanel.

Mixpanel, on the other hand, is more geared toward enterprise-level companies. It has a lot of fancy capabilities but unless you have a data scientist at your disposal or a background in statistics, you might find you’re paying for a bunch of features you don’t use.. 

What Is Kissmetrics?

Kissmetrics gives you the information you need to optimize your checkout funnel and marketing campaigns, anticipate users’ needs, reduce churn, and increase the lifetime value of your customers. We offer language-specific APIs for Ruby on Rails, JavaScript, Python, and PHP. Once our code is on your site, we track recorded events. 

Whether your business is e-commerce or SaaS, Kissmetrics has the tools to measure the metrics and events you value like who is purchasing your products, which events they triggered, and how long it took customers to move through your conversion funnel. Our tools compile the data into easy-to-understand reports to help you pull useful insights from your data. 

Overview

Kissmetrics delivers the information you need to acquire qualified prospects, convert more trials into paying customers, and reduce churn. Kissmetrics ties every event on your website to a real person because it’s people who are buying your products or services, not anonymous numbers. 

Pricing

E-commerce and Saas services through Kissmetrics start at $299 per month for the lowest tier. This tier includes features like tracking up to ten thousand users, ten populations, or groups of people with similar identifying characteristics like age or locale and running basic reports. Our next tier, Gold, begins at $499 per month and includes all of the basic features plus more comprehensive reports like A/B comparisons, revenue reports, cohort reports, and the ability to track double the number of users and populations.

Our final tier requires you to contact us for a quote. In it, we offer the capability to customize the features that are important to you. It also provides you with the best support we can offer, basic or guided onboarding, and technical implementation.  

Kissmetrics Features

Kissmetrics puts the focus on people instead of aggregate data. Kissmetrics’ SaaS and e-Commerce tools include key features like:

  • Distinguishing between new visitors to your website and returning visitors using different devices.
  • Tracking information directly from your website and simplifying otherwise complicated dashboards of endless numbers.
  • Watching customer behaviors in real-time.
  • Discovering which categories and products are trending.
  • Seeing sales and revenue drilled down by category, device type, traffic source, and campaigns.

What Tools Integrate With Kissmetrics?

Kissmetrics understands that you need other applications to generate data and store your information, so it integrates with popular apps like:

  • Shopify
  • WooCommerce
  • Zapier
  • Gmail
  • Mail Chimp
  • Slack
  • Calendly
  • Google Sheets
  • Trello
  • GitHub
  • Paypal
  • Twilio
  • SQLServer
  • Common social media platforms like Facebook and Twitter

Which Companies Use Kissmetrics

Companies like Microsoft, eBay, WordPress, and Carvana have relied on the valuable insights of Kissmetrics for years. These companies enjoy the integration capabilities, comprehensive goal tracking to achieve their business objectives, and how Kissmetrics helps them monitor user habits. 

Pros and Cons of Kissmetrics

Kissmetrics offers the ability to learn more about your customers since we emphasize who is buying your products. Segmenting your customers into cohorts and tracking their activities on your website in conjunction with their demographics provides valuable information about what they’ll want in the future and allows you to adjust accordingly. Our data reports pull vital information about the features that your customers love, what they’d like to see in the future, and which features they think could use some improvement 

In an effort to display your data in a clear and straightforward way, we opted for a clean, streamlined dashboard. We’ve found it’s easier for customers to synthesize the information if there isn’t a lot of “noise” on the page. But if you prefer more customization in the way your reports are presented, this could be a point of frustration. You always have the option to export your data to excel and build your own reports if our presentation isn’t exactly what you want.  

We also offer a comprehensive resource and support center to ensure your learning curve is shortened, enabling you to understand and implement the dashboard capabilities quickly.  

What is Mixpanel?

Like Kissmetrics, Mixpanel is a product and marketing analytics tool that gathers data from a variety of sources and provides useful insights into your customer base, how they interact with your brand, and who is visiting your website. With these tools, you can easily monitor changes in customer attitudes or needs and change accordingly to satisfy them. 

Overview

Mixpanel gives you innovative ways to track your users and learn more about what drives them to purchase your products. Their complex data reports give you information about which features are working and which could use some improvement. 

Pricing

Mixpanel offers three pricing tiers for you to choose between depending on which capabilities you want to leverage. The first tier is free, and it includes features like core reports, a data dictionary, basic monitoring, and alerts. The next tier is called Growth, and it starts at $25 per month. It includes the basic features and additional features like impact reporting, unlimited saved cohort segments, data modeling, and email support. 

Two things to be aware of with Mixpanel’s first two tiers: 

1) Your MTU limit is 100,000.

2) Your event limit is: 1,000 events per MTU.

We’ve found even small businesses surpass these limits pretty quickly. 

Finally, they offer a third tier called Enterprise. You’ll need to contact Mixpanel for a quote, and they provide no estimation of the cost online. Still, they offer advanced capabilities like single sign-on and custom pricing based on the time of year and other events you designate. 

Mixpanel Features

Mixpanel offers a variety of useful features to track customers and conversion rates through your website. Some of the crucial features include:

  • Creating complex queries without needing to utilize or write SQL.
  • Building retroactive funnels and analyzing conversion rates on the fly.
  • No need to build processes to send data to Mixpanel; it can read your data automatically from any data lake.
  • Segmenting your visitors through specific demographic and event information.
    • For example, you could break down the number of people who visited a specific product page who are female, under the age of 30, and own a dog.

What Tools Integrate With Mixpanel?

Mixpanel allows you to integrate plenty of applications into their data gathering services. Some of these applications include:

  • Amazon Web Services
  • Google Cloud
  • Mail Chimp
  • Slack
  • Zapier
  • Common social media platforms like Facebook and Twitter

What Companies Use Mixpanel

Many companies have used Mixpanel over the years. Some of these include Uber, ZipRecruiter, Twitter, and Expedia. 

Pros and Cons of Mixpanel

Mixpanel offers customization for plan building since they provide three separate pricing tiers. That can be good for smaller companies on a strict budget who can’t afford a more comprehensive enterprise solution. However, that low price comes with its share of downsides too.

Users note that Mixpanel doesn’t provide all of the tracking needed to follow the important metrics and KPIs for their business, and they must occasionally use another product analytics tool to supplement Mixpanel. Additionally, other customers find that Mixpanel’s reports aren’t intuitive and are difficult to understand. It can be challenging to determine whether you’ve input the correct parameters or make sense of the information presented in a single report. 

The free tier doesn’t come with support and the support they give the second tier is often limited.

Mixpanel does offer a comprehensive suite of features. Still, without the proper instructions on how to use them and what counts as triggers, many users can’t utilize everything they’re paying for. Some clients even require data engineers just to understand the reports and set up the system during installation. 

Conclusion: Why Choose Kissmetrics over Mixpanel?

Though they share many of the same qualities, Kissmetrics is the clear choice for small to medium-sized businesses that want to analyze their user base, the success of their marketing campaigns, and the strength of their product. Users continually rate Kissmetrics as the top product for ease of use and instant, friendly, and in-depth customer support. 

While Mixpanel offers a wide variety of features, they can’t compare to Kissmetrics’ thorough onboarding and straightforward user interface. Mixpanel doesn’t offer as many features in a single package as Kissmetrics does, and the features they do have can be difficult to learn and leverage.  

Kissmetrics makes it easy for customers to discover and leverage all of their features offered, so you can follow your customers from brand discovery to becoming loyal buyers. Mixpanel has no instant customer support and has a steeper learning curve which means more time spent figuring out their tools rather than utilizing them. 

Kissmetrics offers comprehensive reports and tracks all of the crucial metrics and KPIs you need to ensure that you’re responding to your customers’ changing needs. You’re paying for the ability to aggregate your data in one place and pull valuable insights from a single product instead of needing to access multiple products.

 

Sources:

KISSmetrics vs Mixpanel | What are the differences? | Stackshare.io

Mixpanel Pricing | Mixpanel

Pros and Cons of Kissmetrics 2021 | Trust Radius

https://www.trustradius.com/products/mixpanel/reviews?qs=pros-and-cons