Form a habit with retention loops to reduce SaaS churn
Link your app to customers’ habit so they continue using it unintentionally. You can create a habit loop that includes a cue, reward, and routine that make users engaged. Retention gets a whole lot easier with these loops.
Pinterest has created a habit loop based on users habit of seeing and sharing relevant content.
Slack has formed a habit that has made it one of the fastest growing workplace software.
Survey Monkey has a simplified loop consisting of 5 steps: Sign up, survey creation, send a survey, show landing page at the end of the survey, and new signups.
How to use the technique
- Link your app with a habit. Can your app create a habit or link to an existing user habit? Creating a new habit is far more challenging than tweaking an existing habit. Identify a habit based on buyer personas. Use our free churn optimization framework to learn more.
- Find a cue. What is the primary motivation that makes customers use your product? Find a single cue that is most relevant to a habit.
- Make taking action easier. Cue leads to action. Make it easier for customers to use and access your app and take necessary action that will retain them.
- Pick a reward that users get after taking action. The reward should be instant and relevant to users. It should be as per user expectation.
- Create a loop. Cue, action, and reward create a loop that develops a habit. Your app has to be at the center of the habit.
- Use it for retention. The whole point of creating a habit loop is to reduce churn. It should be easy-to-follow and should solve the user problem.
- Tweak and improve your loop. Does it retain users? Is it actually reducing churn? Do users actually consider it as a habit? Monitoring performance and taking feedback from users will help with improvement. Our free PDF is your best learning source.
Mistakes to avoid
- The reward isn’t appealing enough for users. It is all about the reward. The habits help users achieve a reward. Make the reward attractive.
- Not using it for growth. Not using habit loops to convert customers into loyal lifetime customers is a big mistake. Use loops for customer retention and exponential growth.
- Not paying attention to the ethical side of the question. Make sure new habits introduced by your product aren't holding users back from their life.
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Neal, Wood, and Quinn did research on how habits drive consumer choices and influence behavior. As much as 40% of actions humans take on a daily basis aren’t well-thought decisions rather habits. The actions consumers take are mostly driven by their habits and thus, are not based on active decision-making.
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