Microsoft Product Director on Customer Experience Insights for PMs
Customer Experience Insights for PMs: Importance of Customer Retention
Customer experience is a term that gets thrown around a lot. It can mean a lot of different things in a lot of different contexts. But I want to suggest that to be a good product manager, you need to behave and think like a customer experience manager.
In fact, I started thinking about customer experience as a practice area several years ago at GoDaddy. The company started working on its growth strategy for the next phase of development. At the time, the leadership wanted to understand our customers and the dynamics around our growth cycle. Thus, allowing us access on some insights into where to focus.
As a result, they did a bunch of analysis and worked with some external people like McKinsey. Out of that came some really interesting insights around what customer experience is all about. And that became a core pillar of the company’s strategy. So one of the things that that we learned in that work is that we’re all metrics-driven.
Understand Your Most Important Metric
As a product manager, I feel like sometimes, PMs just start drowning in the data. There are so many metrics that they’re getting. But try asking a PM what metric matters most. It’s a hard question to ask and I don’t even know how you can answer that question. So, I started getting curious and did some research. As it turns out, there actually is. It is retention rate.
What the research shows is that the top quartile performers are the ones that do the best job of retaining existing customers. And if you think about it, it’s a logical thing. If you can actually take the customers that you have, and retain them, they’re going to overtime account for more and more of your revenue growth. Whereas, if you’re trying to gain more customers into your funnel, you’ll be spending more energy and resources to get them into the funnel. So, the thing that I want to invite you to consider is what can you do in your day to day work to always be thinking about retention.
Most importantly, you need to focus on nailing the customer experience. And the reason that that is so important for retention is it encourages them to buy more from you. Plus, they think that no other competitor is going to give them as good of an experience as yours.
Pay Attention To The Customer Journey
A lot of people think if I can engage my customers that can lead to retention. And in a sense, that’s true. However, think about how many times you’ve been a highly engaged user of a service, and then something goes awry. Better yet, what happens when something goes wrong and you need help? So, the thing that’s interesting about customer experience is no one human at any company can own the end to end customer experience. And I think that the way that you can look across the end to end experience is you have to really take a wide-angle view, and you have to consider the customer journey. So, I think it’s customer experience that ultimately drives retention.