S01E04 - When in doubt, divide and conquer!

I absolutely love the divide and conquer strategy. You can practically apply it to any problem statement.

Got a long list of tasks? Divide it into smaller lists and somehow it doesn't seem so long anymore.

Got a pandemic? Create containment zones and fight each battle independently.

Got a war? Break down your constituencies and genocide here I come.

The idea is when you break down a problem into smaller chunks it is easier to find commonalities to strategize for a solution.

We are looking to do the same with our war of user engagement and retention.

Before we begin, a huge shoutout to GrowthX Bootcamp for a phenomenal third session that focused on tackling customer engagement and retention by segmenting users.

And a small recap on our definitions:

In the simplest words, engagement is trying to get customers to use more of your product and retention is attempting to ensure they keep using it!

Now let's win a war!

User Segmentation → Your divide strategies!

In war, it is impossible to create one strategy that can apply to all battles. Similarly in products, every category of user is a different battle, each requiring its own strategies. Thus, the first step is to divide our users into segments before we attempt to conquer them.

There are hundreds of ways to segment a user, but more times than not, they are variations or hybrids of 2 basic segmentation types:

1. User Profile Based

Would your battle strategy be the same in summers and winters? I hope not, otherwise, you are going to lose to hypothermia or heat stroke before anything else.

In products, segmenting the users based on their inherent properties or behaviors outside your product can help develop unique and relatable strategies.

An example would be Walmart having different sales strategies for different cities, age groups, ethnicities, income groups, hobbies, etc.

2. Usage-Based

I have watched enough Game Of Thrones to know that in a war your plan of action would change based on the kind of skill you are fighting. Your strategy is drastically different if you are to fight an army of the dead versus human beings.

When dealing with product users, the categorization of skill can be based on how or how much customers use your product. You can divide the users on multiple fronts:

Natural Frequency → How often they use your product?Revenue → How much monetary benefit they generate for you? Feature/Sub Product → Which features or sub-products they use the most? Recency → When was the last time they used your product?

Think about it, would your strategy to engage/retain a high revenue-generating user be the same as a user who has used your product once?

Usage-based segmentation can be very vast and is always unique to the product. It will align with both user and company goals.

Engagement & Retention → Your conquer strategies!

Now that we have divided our war into smaller battles, it is time to conquer and win!

Engagement → Frequency, Depth, Features

Think about your most used product and why do you use it over others?

For me, Spotify takes up 30% of my daily phone usage and one of the primary reasons is the personalized curated lists. There are a lot of music streaming applications with great recommendation systems that can solve for my purpose, but I go back to Spotify because it keeps me engaged with features like Daily Mixes, Your Top Picks, etc.

Engagement will be the cornerstone to a product's success and define its edge over competitors.

Engagement strategies would be specific to user segments and products, however, they will usually fall under one of the three buckets:

1. Increasing frequency The focus here would be on getting the user to do the product's core activity repeatedly. For example, e-commerce sends push notifications, to nudge users to buy more often.

2. Increasing depth of use These strategies focus on increasing the intensity with which a customer uses your product. For example, recommendations during online shopping increases your cart value, or the 'Watch-next' feature on Youtube increases the time you spend watching videos.

3. Increasing number of features/products In this kind of engagement, you promote customers to use features/products that they aren't currently using, emphasizing how it would add to their existing experience. For example, Amazon promoting avid readers (customers who purchase books online) to buy Amazon Kindle and join the e-reading phenomenon.

Retention → Churn, Solve, Resurrect

How do you get users to keep using your product?

By understanding why they don't want to use your product anymore!

This is done in 3 steps:

1. Breakdown your churn Every time a user churns away from your product, figure out the reason.

Did the product not solve their use case? Did the product not meet their expectation? Did they not like the experience of the product? Did they find better pricing? Do they no longer have a use for the product?

The reasons for churn will vary from product to product but will either be voluntary or involuntary. We will look at only voluntary reasons because those are the ones that can be solved.

2. Solve for your gaps When you analyze your churn, you will find a list of reasons that are resulting in low retention. Go back to the whiteboard, find solutions to fill these gaps, and implement them.

This process will ensure that no future customers leak from the funnel owing to churn reasons you discovered.

3. Resurrect your lost users Now that you have solved your churn, try and bring back the users you lost.

This can be done by running resurrection campaigns with churned user segments whose needs now align with your updates.

However, it is very important to consider the opportunity vs the risks of such campaigns; there is a possibility of a negative feedback loop if users are constantly bombarded with campaigns after leaving your product.

Are you ready to divide and conquer?

The framework I have outlined barely scratches the surface of what you can do for user retention and engagement. It only attempts to get you thinking about engagement and retention in the correct direction. You would have to deep dive into each part before you can even begin strategizing.

So buckle up, you have a war to win!