Stay silent or issue a receipt? Which is the best retention strategy for a subscription model?
If your business model is based around subscriptions what's best for retention? Send out a monthly invoice with a reminder of the great things that customers have purchased or keep silent? It's a question that was posed on the Growth Hackers forum
and one that I come across on a fairly regular basis.
From a pure retention perspective NOT sending out a monthly communication is better. Users who disengage from the product gradually over time will “forget” the regular payment and won’t pay too much attention to it UNLESS they actively manage their credit cards. Effectively they give you money and you save money on not having to provide the service they’re notionally paying for.
However, from a customer experience perspective this is a pretty poor way to go and in some regions is culturally unacceptable and can even be illegal.
Within the Payment Protection Insurance market this was a common tactic, with many business cases were based on customers passively paying a premium each month they either forgot about or weren’t entirely aware of. End result was when the customer “woke up” (as in they realised they’d been paying a monthly premium for a couple of years and seen no value or heard nothing from the insurer) complaints came in thick and fast. Having to write to customers on this programme was known as “disturbing the book” and resulted in high cancellation and complaint rates.
The most balanced approach I've come across thus far is from Naked Wines in the UK. If you’re subscribed to their “Angel” service, which means handing over twenty pounds a month, and are inactive for a period of time they re-engage. They remind you a monthly payment is being made, that there is a credit on the account and encourage you to take action. That action could be buy another case or it could be cancel your account, both options are presented and in a way that acts more as a reminder from a concerned business than as a hard sell.
For me this questions is one of engagement. If the customer is engaged with your business and interacting regularly then a monthly "receipt" may not be required. If they drop off the radar and continue to pay without accessing the service then action to re-engage with them, even if the outcome is a lost customer and revenue, is essential.
Staying silent and hope they won't notice is, to me at least, unethical at best and deceptive at worst. Not an ideal way to build relationships with customers.
Very British Problems: a good example of winning new fans
My new favourite T-shirt comes from Very British Problems
and it isn't just because it appeals to my self-deprecating sense of humour.
Along with said t-shirt came the following handwritten note and a small packet of sweets. Not much, I know, but enough to make me smile and bookmark them in preparedness for my next t-shirt.
So thanks for making me smile for all the right reasons.
Could suppliers undermine your disruptive startup?
A client I was working with had big hopes for its disruptive business model. As so often with these things, their aim was to tackle issues around speed and ease of use that plagued their target industry. It would all be done online and through the intelligent application of technology.
If only things were that easy.
A critical supplier had requirements that derailed this lofty aim. They were stuck in the past, requiring paper documents with wet signatures and loading up delays that would take their application process from a few minutes to a couple of weeks.
This happens all too often with digital businesses. Disruption and innovation are blocked by suppliers who have no desire to support it. For a true leap in experience the suppliers also need to innovate, yet as long as their traditional market is in place they have no need. If they are large enough they can effectively lock out innovation by placing their own internal processes in the way.
Of course this does open the door to new entrants or for smaller suppliers to step up. My client was able to source what they needed from an unexpected quarter, freeing this major blockage and setting them back on course to launch a major disruption.
If you're encountering difficulties with potential suppliers that can't (or won't) support your business plan there are a few options available to you:
- rerun your supplier selection with a widened net. Although there is an inherent risk in choosing less established players, working with smaller businesses often creates flexibility as they're more willing to work for the business and less rigid in their approaches. However, you must be aware a greater level of due diligence is essential to ensure you don't chase one that's going to fail on you;
- change your plans. Sometimes when you're locked into a relationship or the choices are limited it can be frustrating. Rather than dwell on this a more sensible approach is to adjust plans and reschedule aspects of the business roadmap to accommodate the constraint. Being able to demonstrate your business is a success is a powerful way to bring new, more flexible suppliers into the open;
- go it alone. If practical you could elect to build your own version of whatever it is that you need. However, this can be costly, time consuming and distracting. One firm I worked with spent so much time and effort building a seamless multichannel contact centre to fit its exact needs that the core product was poorly defined and ultimately failed.
While you might like to think you're calling the shots with your new business you must be mindful of the realities of dealing with suppliers. Take care in selecting them, be mindful they carry considerable power and if you need to adjust your plans do so quickly and with your eyes still focused on the long game.
Do your user experience personas have the right focus?
Personas have become the fundamental building blocks for user experience design. They're used to help guide decision making, ensuring the entire design - from the high level strategy to individual details in services and websites - is consistently delivering what the customer expects and what the business wants to achieve. Unfortunately it is all too easy to cram so much information into them that they lose focus and become unusable and even counter productive.
During my years working in user and customer experience design I've encountered four dominant themes that drive persona development. The most effective persona sets have chosen one of these as a dominant focus, using it to drive a design that is aligned with the core business objectives. Around this core are elements from the other themes, cherry picked to add more colour and context without distraction.
Useful for companies who are explicitly driven by financial targets (such as increasing revenues or profits), a financially focused persona aims to target customer groups whose spending levels and patterns align with company objectives. In its most simple form personas are created by looking at factors such as "wallet share", spending levels, frequency of spend, profitability and purchase volume.
Some businesses are driven by the demographics of their customers and should align their personas accordingly. Understanding customer groupings by age, gender, profession, location and so on can be useful for financial services businesses whose products are often tailored around demographic data.
Where there is a strong "lifestyle" brand the behaviour of the customer should be the focus. These personas attempt to describe the customer in more "esoteric" terms, often considering their life objectives, how they want to be perceived by peers and their expectations from the companies they do business with.
Typically encountered in B2B companies, there are sectors where the emphasis is on the functionality that the customer wishes to access, in which case a functional focus is appropriate. This can either break down the business's offerings into functional blocks that are then distributed logically amongst personas, or align with the job function that the persona relates to.
While personas should have a dominant theme that aligns with the strategic objectives of the business, it is important that elements of all four find their way into the design. This creates a more rounded persona that is easier to relate to and design for. It is important to retain the core focus though, so careful cherry picking of factors from other elements is required. When I design personas from core themes I will generally have a robust description for the core with a more flexible outer that allows some scope for interpretation and debate. For example, a function oriented persona set may have clear descriptions for roles and responsibilities that each occupies, while other elements may be couched in vague terms (such as being described as middle aged rather than aged 35-50).
Personas are essential to effective customer experience design and should be aligned with the objectives of the business. A dominant theme in their design is likely to emerge from this approach, although as a designer you should always be checking to ensure other elements of the wider themes make their way into your designs and decision making.
If I ran the Harvard Business Review I would be ashamed to see this
I've been a subscriber to the Harvard Business Review
for a few years. It's been entertaining and occasionally useful, but increasingly I've got a sense of it getting a little too pretentious. The articles haven't been as thought provoking as they used to be, and frankly I've found a lot better written and well thought out arguments elsewhere.
The end of the love affair started a couple of months ago when I got a letter from them
. It was so full of jargon and impenetrable attempts at "calls to action" that I discarded it. Turns out it was a renewal reminder. I know this because I've now received a letter that asks me to "approve my interruption of service".
I've no idea what that means, but it doesn't get better on the inside. In there I've got a letter so full of clumsy attempts to get me to respond that it's embarrassing:
- respond within 9 business days to an undated "letter";
- the 8% saving isn't;
- they've used crass phrases such as "rescind suspension" and I'd love to know what an "opportunity alert" is;
- while they're at it maybe they can explain why I won't be left behind when they're offering me trends from 2011;
- but I am glad there's a "statement of value".
Once HBR was relevant and I'm sure that many people will respond to this kind of crap. I won't be one of them.
And if it were my organisation that was sending this kind of rubbish to long standing customers in the hope of winning them back I'd be ashamed.
Lean startup or corporate business unit? The challenge of managing stakeholders when you are both
Increasing numbers of companies are looking at the lean startup movement
and seeing it as a way of launching new products, entering new markets or even completely reinventing their businesses. They believe that by appointing you to run a "lean breakout", giving you a separate team and providing some seed funding, magical things will happen leading to new revenues and profits.
If only that was the case.
Having working in, for and around these types of enterprises for many years my experience tells me that as the "managing director" or "CEO" put in charge you have your work cut out for out. Whilst an entrepreneur will deal with investors who are willing to take risks and be supportive, you are likely to be faced with risk-averse individuals who see your presence as a direct threat to the status quo they've worked hard to build.
Nowhere, in my experience, is this conflict more evident than when it comes to funding, so called Corporate Venture Capital
. Although budgets may have been agreed, you will have to report back on progress to either protect the funding you have or secure more. And whilst the emphasis in a lean startup is on the customer, for a while at least you will have to put that to one side and instead focus on being a good corporate manager.
Managing these stakeholders may seem like a drain on your energy, but it is a vital activity and one you cannot set to one side. You can, however, remain true to the lean principles by treating them as customers and applying an agile approach to winning their hearts and minds.
Establish what they require at the outset. Don't second guess or assume, be explicit in asking. You should also treat each stakeholder as an individual rather than lump them together under the heading of "board" as many do. This will help you to focus your efforts and just as you might build a unique customer experience for each segment, so you may be able to more easily judge a unique experience for each stakeholder.
Stakeholders will direct what they expect to see and the relative importance of it. As work progresses you should keep in touch, providing updates and early sight of any materials being produced. Not only does this help to ensure you're not rushing off down the wrong path, it also builds comfort and confidence and turns a board presentation into a point of consensus rather than debate.
Treat each board presentation as a release and model accordingly. Identify what needs to be included and get it into a product backlog, prioritising activities and managing the build of the board presentation within a scrum format. This will not only help maintain focus and direction, it will also reinforce the cultural view that the business is agile.
Although you may be agile, do not discount the importance of RAID. In some agile circles the concept of a RAID (Risks, Actions, Issues, Dependencies) log can seem inappropriate. In a corporate environment where governance is taken seriously, being able to demonstrate these things are known and being tracked can add to credibility and give greater comfort. It also helps you to keep track of the environment in which the breakout is taking place.
Finally, if the decision is delayed as yet more information is requested do not be disheartened. Look at what has been done, learn from what they have asked for, and treat it either as a "persevere" (you need to refine what you already have) or "pivot" (retain something of your strategy but create new products to prove your business case).
As the head of an internal lean startup you have to accept you are unlikely to be as true to the cause as an entrepreneur starting their own business. You can retain that sense of agility though in the way you engage with them, by treating their various meetings and check points as releases, providing some corporate style reassurance around risk management and seeing each delay they make as an opportunity to learn and make a pivot or preserve decision of your own.
6 ways to ensure your design workshops build credibility with clients
Workshops are an essential part of the creative process. They're tools used by agencies and designers to create consensus, validate learning, challenge thinking and a host of other reasons that move the project forward. Run well they are powerful and rewarding, delivering a lot of value over a much shorter timescale than trying to pick off individuals all at once.
For clients, the potential rewards are balanced against their significant investment. Participants, unless the project is their day job, will have been taken out of their work environments and all the day-to-day work they have to do will be waiting for them when they get back. Contractors and consultants on high day rates may be in the room. All eyes will be focused on the event and judgements will be made about the sponsor on the basis of what happens.
When a design workshop goes well credibility has been gained and the praises of the design agency sung. When one's gone badly questions about the agency's suitability and competence have been asked, more than once to the point where contracts have not been renewed. Whilst much has been written on workshops in general, there are recurring themes that I have encountered when participating in creative workshops. Although they are not unique they do appear to resurface time after time and have repeatedly contributed to agencies having their work reduced.
1. Know what you're trying to achieve.
On a couple of instances I've walked into workshops with agencies where the objective has been less than clear to all concerned. An event like this should only happen if it is clear what value it is going to bring to the table and how everyone is going to walk away feeling positive. Forget terms like "ideation" or "loose agendas that are more frameworks", focus on what the client wants, what your team need and that both are aligned.
2. Have a structure.
Rigid agendas are not required, but a good understanding of what the day looks like, the time allocated to activities and the value each will bring is essential. Creativity is often perceived as intangible, and so clients will cling to what gives them comfort - the experience of the day. This is particularly so before the workshop takes place (where the agenda will be scrutinised by the client's team) and during the day for those who have been drawn in from their day jobs.
3. Be flexible.
Having a structure does not mean blindly following the agenda no matter what happens in the room. Activities can be extended, others dropped or new ones added in as the situation unfolds. The key here is that these decisions are exposed to the client as an adaptation of the agreed agenda, not as "winging it" as can come across where a structure isn't in place at the outset.
4. Know your slides.
I've had the pleasure of experiencing facilitators bluffing their way through slides more than once. Before the session begins make sure you are familiar with the content of any presentation materials so that you can speak to and around them with confidence. But that isn't where it ends. If you don't understand the workshop structure and objectives either then a disaster awaits you.
5. Prepare thoroughly.
Turning up to a workshop and "winging it" is the most common cause of dissatisfaction I've experienced. During the pre-sales phase this might be because the client doesn't want to pay for the preparation work (or even the workshop itself) and so costs are held down and time not dedicated to it. Sometimes it is an arrogance of the agency driven by a belief in their own creativity. Whatever the belief, the client will have expected you to have considered any materials they've sent, fed in discussions and structured something accordingly.
6. The small stuff.
The workshop experience starts before anyone arrives, so pay attention to the details. One client of mine canceled a workshop because the materials they were sent were so badly written they lost confidence in the ability of the agency to deliver. The staff of another complained on their way home about being sent away to get their own lunch instead of having it provided. I could go on, but the key message is the client should not have to call into doubt the agency's commitment because of small details and mistakes.
For a creative agency a design workshop is a wonderful opportunity to demonstrate to the client the value they are getting. Don't throw that opportunity away with poor planning, inadequate preparation and a lack of attention to detail. Remember that nine times out of ten the client will want you to succeed, so don't make silly mistakes that could undermine that.
Gamification in Financial Services: how to make long lasting changes to customer behaviour
Over the past couple of years "gamification" has started to emerge as a major topic amongst customer experience professionals. Whereas loyalty marketing and CRM seeks to reward or drive specific transactions; gamification applies behavioural psychology and practical business design to effect longer term changes in behaviour. These changes are achieved by nudging the customer forward through a variety of techniques to build knowledge, self-esteem and a sense of achievement.
Gamification is maturing and yet Financial Services seems to be a little left behind. Although some firms have taken steps into the space there is much more than can be done.
1. Improve education.
The dominant reason gamification is used in Financial Services is for education. This has been done by developing online games that inform and educate the user about how to use a specific product, understand investments or manage their general finances. By improving self-confidence customers should be more willing to engage with their products, protecting existing income and generating additional product sales.
BBVA is the most prominent user of gamification, generating 100,000 users within 6 months of launch and building a much stronger relationship between its customers and online banking offering.
2. Support the purchase.
Buying a Financial Services product is often a complex and painful process to put customers through. The primary application of gamification in sales is the "progress bar" which shows the customer where they are and how much more needs to be done. Additional techniques can be used to encourage the customer to complete or return to a purchase they have paused, such as using a countdown to the expiry of their quotation. By showing "what people like you" have selected as options, customers can also be made to feel more confident in selecting additional product features.
3. Increase spending.
Moving customers through the product suite is an area where there is significant opportunity for gamification to bring value. With this approach the objective is to encourage the customer to adopt behaviours that unlock additional features within their existing product or provide a gateway to another product. This could include behaviours designed to reduce their risk and make available previously excluded covers or providing information that can be used to position additional products.
A commercial insurance design looked at creating a "risk centre" where clients could actively manage their business risks. The design used "challenges" to encourage clients to adopt behaviours and practices that reduced risk, peer pressure to compare their performance with others and levels that unlocked proactive quotations for other products in a non-threatening way.
Engaging customers has long been a challenge for Financial Services. Many products are sold on the basis of an automated renewal so that the customer is not disturbed more than is necessary to retain their business. Using gamification, customers can be encouraged to adopt and embed positive behaviours that strengthen their relationship.
For example, “personal action plans” are sometimes used in health insurance, but lack any connection with the customer’s experience with the business. A gamified version may nudge them towards behaviours that reduce their risk of claiming, perhaps by offering a higher level of benefit, comparing them to peers on leader boards or awarding “badges” for positive behaviours.
5. Improve service.
Although there is a lot of focus on using gamification to improve the user experience, there is also considerable potential to use gamified techniques within the organisation. Leaderboards for customer satisfaction, gamified training programmes, badges for specific expertise are all tactics that could be employed to improve the knowledge and commitment of staff.
Numerous companies, from Deloitte to Ford, have used gamification in their employee development with positive results in terms of engagement, commitment to work and competence.
By improving knowledge, self-esteem and sense of achievement, customers are becoming more willing to commit to companies that have gamified their experiences. By augmenting transaction based rewards with deeper routed behavioural changes, those who are adopting gamification in their strategies are starting to see benefits in terms of reduced churn and increasing revenues. The challenge for Financial Services is whether thinking can extend beyond providing educational games and be willing to commit to achieving longer term, more engaged relationships with customers.
I've 25 years of experience building new channels, markets and businesses for startups and growing companies in the UK and EU.
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