The New Rules of Retention: Driving LTV in the Wake of COVID-19

There’s no question that the pandemic has changed consumer behavior over the past few months, with many people turning to new products and services to help them navigate this complicated time.

As a result, a number of companies have seen an uptick in new business. This may be good news for these brands right now, it won’t mean much if new users don’t stick around for the long-term. So how do marketers drive retention as we navigate the territory ahead?

In a recent episode of Ink Tank, Jackie Mattia and Naveen Wall from the Movable Ink Strategy Team spoke to Myles Kleeger, President and Chief Customer Officer at Braze, to discuss industry trends and customer retention in the wake of COVID-19. Here are the top takeaways from their conversation.

Personalization helps cut through the noise

As brands compete for mindshare in the current environment, it’s critical to communicate the unique value you bring to your customers’ lives. Personalization is an incredibly effective way to make sure users’ needs are at the center of communications. And the data certainly makes a strong case for it, with personalized messages driving a 23x stronger impact on purchases in April.

Streaming media is a particularly competitive industry at the moment, with many new services entering the space (Quibi, HBO Max, and NBC Peacock, to name a few) on the heels of last year’s Disney+ launch. And of course, there’s still the 800-pound gorilla of the industry, Netflix. The data says there’s room for all of these companies to thrive right now, but we still don’t know if that’ll be the case once the economy begins to open back up. To stand out from the crowd, it’s pivotal for streaming services to promote relevant programming to subscribers based on their past behavior and other insights you may have about their interests.

Localized notification strategies keep consumers engaged

In these uncertain times, people are seeking more connection to their local environments and communities. One place we’re seeing this play out is local news, where more audiences are tuning into things like press conferences from governors or mayors in large markets. National media brands are embracing this shift by using more localized notification strategies to keep viewers informed and engaged with their content in real time. And they’re seeing better performance in their notifications, as the content is more timely and relevant.

For brands that are built around in-person experiences, it might feel more challenging to adapt to the situation, but with a little creativity, you can still keep customers engaged. SoulCycle is a great example. When they had to close all of their studios due to COVID-19, they knew their community was going to be severely impacted. So they created regional Facebook groups or “Virtual Studios” to allow riders to stay in touch with their respective communities while they wait for studios to reopen. Then they sent each customer a personalized email and directed them to a localized Facebook group for their area.

Mobile usage is up — and linked to higher retention

Interestingly, 60% of consumers are reporting that they’re using their mobile devices more because of the pandemic. The financial services industry has seen a significant uptick in this area, which makes sense, considering branch closures, a volatile stock market, and consumers’ need to make transactions while at home. Of new users, 71% used mobile over the past 90 days, and their 7-day retention rate was 4x higher than that of web users.

Another industry that’s experienced a huge surge in mobile app activity is EdTech. Not only is their user acquisition up by a staggering 270%, but 97% of their new users are using mobile apps. Particularly notable here is how sticky these users are — the YTD rolling 7-day retention rate for EdTech apps is 77% higher than the aggregated rate of all other industries. On top of that, half of new users from mid-March to mid-April had greater than one session per day. This, coupled with a strong positive correlation between user sessions per day and spend, means that higher mobile usage is translating into revenue.

However, just because mobile usage is up doesn’t mean you should ignore your web customers. Though web still trails mobile, the split is more even these days, so it’s important to pay attention to retaining these users too.

Deliberate customer retention strategies are key

Given the uncharted territory we’re in, it’s unclear if new users acquired in the current environment will be high-quality, long-term customers or promotional fly-by-night ones. In that spirit, it’s crucial to identify loyal customers so you can invest in the right places. If you’re spending money on acquiring new customers, but don’t have a solid plan in place to retain them, your effective CPA will shoot through the roof.

Many media companies have offered free trials during this time, and the next step is to compel new audiences to stick around after their promotional period ends. Getting them hooked is all about encouraging habit-forming behaviors and exposing new viewers to relevant content. By pairing a smooth onboarding experience with a personalized retention program that targets users inside and outside the product, you can keep them coming back. Since today’s competitive environment is similar to the time around the Disney+ launch, we can take a cue from top performers from those months, who were more likely to send in-app messages and use action-based language.