Conversion vs Retention
Conversion vs Repeat Customers
This post was inspired by the recent meetings I had with clients and prospective clients. There is a smoke screen in the startup industry that focuses on user growth….
Actually more on imaginary user growth. Why imaginary? Because you can choose from endless tools to grow your subscriber base. Good landing pages, Google Adwords, conversion tools, tweaking your landing page copy, showcasing your products (when the showcase itself can be an ad) — in short, growth hacking.
The point most companies miss is that having 40 000 subscribers won’t itself bring them any closer to a viable business model.
Of course, that’s not an issue if you are happily raising money round after round and focusing on other metrics. But at some point you will have to convert your email addresses to real money to pay for hosting, staff and everything and everybody involved. For some companies this process starts sooner, for others later, but the point must inevitably come.
This plague can be seen if you compare your paid user/subscriber ratio for your first period and the same ratio for later stages. We suggest you do this health check every quarter.
Here’s the kicker, if you focus too much on having users on board you lose focus on why you want them to join. If you separate marketing from product, all you will end up with are expensive and very effective conversion methods and metrics focusing on “unreal” user growth.
The gap stems from product vs. marketing. In the design or FMCG sector the customers have no information on the product they make buying decisions solely based on ads and availability. Future buying decisions are marginally influenced by the product’s features. Either it works or not, it tastes or not. This is not like the food industry where the customers really don’t know whether the marketing message is valid or not. Here they have first hand experience when they start using it.
What does this mean? Well, most marketing focuses on what makes people subscribe and utilizes wording that they think is consistent with the product offering. There is no bad intention or black hat practices involved, most marketing people in the startup industry are just measured the wrong way.
But the tech field is different. You subscribe and you see whether your perception of the product matches the message or not. Most of the times what they say and what they deliver are two distant galaxies. This means you create a certain impression of the product with your marketing messages.
For example, “It has a sleek and minimalistic user interface and will change this or that business process forever by making you more this or that.” And it turns out that your product can actually do it… but not the way people want it.
It is possible to measure people’s intent on why they need one product or another. It is a bit complex but a good start is to have them tell stories and focus on the implicit emotions they tell you.
Implicit means hidden, not articulated extensively. Like when people tell you they are honest they might or might not. So you won’t believe them. But honest acts will result in making you feel that the other person is really honest.
The same can be applied to any product. Do they need simplicity? Or do you just think they need it? Do they prefer reliability? Or that was just the result of your misleading questionnaire?
Closing the gap between what your software is capable to deliver on the emotional front and what people want will drive sales. Closing the gap between what your product delivers, what marketing makes people think and what actually makes people stay with you will skyrocket your subscriber to actual buyer conversion rate.
It might surprise you but the above logic does not inherently imply that the product is in any way bad or useless. It just highlights that the gap is more often between what product people deliver either consciously or not consciously and what marketing people say for converting or evangelizing.
The sooner you find out what people love in you the sooner you can tune your conversion strategy and copywriting. And definitely not the other way around. That’s just doomed to fail. Quickly or slowly but definitely doomed to fail.
We provide our customers with a product development strategy that is consciously based on emotional impact. We call this emotion-based product development. The future belongs to authentic products and services capable of triggering emotions. Join us on Facebook or LinkedIn.
