Part 1: The Metrics to Segment Your Dormant, Casual, and Loyal Customers
There are three types of customers in this world: dormant, casual, and loyal. By figuring out where each of your customers falls, you can achieve three goals: target idle users with highly personalized content to re-engage this audience (through methods that we will soon outline), push casual users into loyal customers through special services and offerings, and provide loyal customers with extra care to encourage brand evangelism.
But first, how do you decide what defines each of these customer segments?
There are three categories of metrics to track, each of which includes numerous events. By tracking these metrics and identifying patterns within and across them, you can define where your customer falls on the loyalty spectrum, and successfully push customers into the next tier.
The Metrics to Track
These are any daily, weekly, or monthly user activities that Product and Customer Support teams manage to track customer engagement.
Monthly Active Users (MAU): Monthly active users is the total number of unique users over a 30 day period
Daily Active Users (DAU): Similar to MAU, DAU is the total number of unique users in a single day.
Session Length: Session length is the time elapsed from app launched to app closed or app time out. This tells you how much time users are spending in the app per session and uncovers revenue potential from particular segments. Segment users to see which groups spend the most time in your app and why. You can find this metric by calculating the length of time a user is in your app from launch to exit.
Session Interval: Session interval is the time between the user’s first session and their next session. This metric is important to gauge how frequently each user segment opens the app. When you have a baseline for the time lapse between sessions, use this opportunity to optimize the customer experience and encourage more app usage.
Time in App: Time in-app measures how long a user was in your app over a period of time. This metric will identify how often users engage with the app and reveal behavioral patterns among your different user segments.
Conversion rate is the number of potential customers who sign up or started a trial converted into paying customers within a set period of time. Increasing conversion rate is directly correlated to increasing customers, MAUs, and overall revenue.
Churn: This is a measure of dollars, customers, or unsubscribes lost during a given period of time. After calculating churn, calculate the amount of revenue lost per segment of payment tiers. You might notice that customers belonging to a middle tier payment plan are churning faster than other tiers. It’s important you dig further to find the answer to why your customers churn, and particularly if there are patterns among user segments.
Retention: Retention is the opposite side of the coin to churn. Retention measures the cohort of users who actively use your app over a period of time – usually monthly or weekly. Calculate retention by dividing the number of users retained per month by the number of installs at the beginning of the month.
In-App Revenue: In-App Revenue is the total revenue collected from customers that use your app from purchases, ads, purchasing points etc. Track both the cumulative amount spent by customers (some will spend a ton on a single item), but also track the number of purchases (other customers will spend a little, but often). Use both of these metrics to define a high-value customer. A customer who is spending less but more frequently than one who spends a ton at once will actually be interacting more with your brand more, and should therefore be considered equally high-value as the big spender.
Customer Lifetime Value (CLTV): Customer Lifetime Value or LTV is the estimated total revenue during a customer’s lifetime using the app. This allows you to see growth over time for different audience segments and identifies which customer segment is the most loyal, greatest evangelists, and biggest spenders. To calculate CLTV take the average monthly revenue and multiply by the average lifetime of a customer in months.
Boost Metrics with Customer Feedback
Although the above mentioned metrics each require their own strategy, by collecting actionable customer feedback you can boost each of these metrics across the board. Creating a private channel for complaints will allow your customers to vent frustrations while also preventing a minor grievance from haunting your public ratings. Customers would rather have their app issues solved directly, and only resort to public mediums when all else fails.
Before you start reaping the benefits of product feedback, it’s imperative that you provide customers with a way to easily report bugs and request features with a private in-app feedback channel. You want to engage users in a conversation, which means you need to proactively ask your customers for their insights.
To easily capture feedback on a regular basis you can implement tools to help automate the process with highly targeted surveys or triggered rating prompts.
In App Surveys
With in-app surveys mobile product managers are able to ask specific questions about the product and receive real-time responses. By eliciting feedback this helps guide smarter-decision making when building out a product roadmap because you are able to align product with the needs of your most loyal fans. For example, you can target power users who have launched the app more than 10 times in the last week, who made at least 2 purchases, and did not want to leave feedback or a rating in the app store.
Triggered Rating Prompts
The optimal time to ask for an app review is after the customer has accomplished a value add. This could be beating a level, completing a task, or successfully resolving a customer service issue. The key is to deliver a simple question: “do you enjoy using X app?”. If your customer responds with “yes”, then follow up with the question: “would you mind sharing the love on the App Store?”. If your customer responds with “no”, you will want to know what exactly it is about the experience they are not enjoying – especially if your prompt is targeting high value customers.Customers who are not liking the app should be immediately re-directed to the highest level of customer service to communicate with a representative that can understand the why (ideally in-app chat).
Ultimately, you can then discover two things: what potential roadblocks many of your customers may be facing, and what this particular customer needs to be a loyal customer. Triggered rating prompts allow mobile product managers to collect direct feedback to inform future product decisions and deflect negative app reviews to a private feedback channel.
Next week, we will delineate how to lure dormant customers back into your app and what it takes to bring the middle 50% of your customers into the top 20%. Don’t settle for satisfied customers; aim for ones who are hopelessly in love.