Winning customers might feel like a battle for any business. But ensuring those hard-won customers keep using the product beyond their first login is nothing short of a war for SaaS businesses.
A new product always appears shiny and attractive. After the first days of onboarding, you may find that your new users are excited about exploring the product and navigating their way through the platform.
Give it a few days or weeks, and you start to see a drop in the number of active users.
This could happen for any number of reasons – users stop finding value in your product; something else starts occupying their time and they forget about your product; they run into a roadblock on the platform and don't know how to resolve it – this list could be endless.
It is at this point that you risk losing your user forever – the much-dreaded term for it being “user churn”.
Product leaders and product marketing managers must ensure that users keep coming back to the product and using it. Without consistent engagement and value, your product risks fading into irrelevance.
Retention is not a one-time play – it is a strategic commitment to exceed expectations, build trust, and help every user unlock the full potential of the product.
Tapping into your users’ emotions can be your powerful way to transform fleeting curiosity into a deeply connected experience your users crave. When you go beyond features and forge genuine bonds with your users, it makes them feel valued and understood, ensuring they never want to stray or stay away.
What Is User Retention?
User retention measures the number of individual users who continue coming back into your product and using it over a specific period.
For instance, assume you want to track the number of users you have retained over a month. Let us start with 100 active users on January 1st. Each week, you check in and see how many are still actively using your product:
- Week 1: 85 active users
- Week 2: 78 active users
- Week 3: 72 active users
- Week 4: 68 active users
To calculate the user retention rate for the month, simply divide the number of active users at the end (68) by the number you started with (100) and multiply by 100%.
In this case, your retention rate for January would be: (68 active users / 100 initial users) * 100% = 68%
So over the month, you retained 68% of your active users.
While this example uses a monthly timeframe, you can track retention for any period – week, quarter, or year.
Why Does User Retention Matter for a SaaS Business?
Guess what is better than winning a new customer? It is not acquiring another customer. It is retaining an existing one.
User retention is more cost-effective than user acquisition
Studies show that it can be 5-25 times cheaper to retain existing users than to acquire new ones. Think of all the marketing and sales resources you normally spend on winning a new deal. You can instead redirect those resources toward supporting retention strategies.
For successful retention, you need to keep your users engaged with your product beyond the payback period. The key is to ensure that once a user has completed the onboarding process and logged in for the first time, they find the product valuable enough to keep coming back for more.
Retention strategies boost CLTV – the lifetime value of users
Users that are retained become more valuable over time. As they engage with your product, they discover and utilize more features, upgrade to paid plans (especially if it helps them unlock advanced-level functionalities), and may even become advocates of your product, referring it to others.
Happy users are your biggest champions. Their positive recommendations attract new customers organically, saving you marketing dollars while building trust and credibility. This translates to increased revenue and sustainable growth for your business.
By retaining users you can create a more predictable revenue stream
Users tend to leave your product or cease to actively use it when they are dissatisfied or can no longer find value in it – and there is no saying when that might happen. Churning users end up creating an unpredictable revenue stream.
Focusing on retention strategies allows you to stay in tune with your users, nudging them with the right triggers at the right time so they can keep finding value in your product and returning to it. This will help you maintain a more predictable stream of revenue.
How You Can Use Emotions to Power Your Retention Messaging
Emotions are not just fleeting feelings; they influence how we perceive the world around us, including the products we use and how often we use them.
Understanding the psychology of emotions and how they shape user behavior is crucial for any business looking to drive user retention, especially SaaS businesses.
Leverage nostalgia to deliver a sense of familiar comfort in your product
Nostalgia can act as a powerful tool for engagement, tapping into positive memories and emotions associated with the past. Reminding users of their in-product experiences can create a sense of familiarity, comfort, and accomplishment, motivating them to return and continue interacting with the features they have enjoyed or found the most value in, in the past.
Highlight Past Achievements:
Personalized messages showcasing completed tasks, streaks, or milestones can evoke a sense of pride and accomplishment. You can use visuals like progress bars or badges in your communication to reinforce the positive experience.
Celebrate Milestones: Recognize user anniversaries or significant usage milestones with personalized messages, exclusive content, or small rewards. This shows appreciation for the user’s loyalty and encourages them to get back into the product and use it.
Personalization is Key: Tailor your messages to individual user experiences. Avoid generic nostalgia triggers and focus on what resonates with each user based on their unique journey with your product. While nostalgia can be powerful, it is important to keep your focus on the present and future value the product offers.
Unlock the power of curiosity to drive action
Curiosity is a strong motivator that can get a user to explore new features, engage with your product, and stay invested in its evolution. But simply telling them "something new is coming" is not going to be enough. To effectively spark curiosity, you need to build anticipation.
Sneak Peeks: Offer glimpses of upcoming features through teaser videos, screenshots, or limited access opportunities. This fuels anticipation without revealing everything, keeping users on the edge of their seats and wanting more.
Personalized Recommendations: Based on user behavior and interests, suggest new features or content that might pique their curiosity. This personalized approach ensures relevance and incentivizes exploration.
Gamified Elements: Implement elements like "mystery boxes" or "unlockable features" to create a sense of discovery and reward users for exploring new functionalities. You also create a sense of anticipation by using countdown timers for upcoming releases.
User-Generated Hype: Encourage users to share their thoughts about upcoming features through polls, social media, or community discussions. This fosters community engagement and builds excitement.
Early Access Programs: Offer limited early access to select users to gather feedback and build anticipation for the broader release. Encourage users to share their thoughts and concerns about new features early on. Not only is it a great way to bring back your users into the product it also gives them skin in the game. This allows you to address potential issues and refine the experience before a wider release.
Cultivate a sense of belonging to drive re-engagement.
Belonging is a powerful human need, and this has never been truer than now when we are surrounded by pixels, bits, and bytes. By fostering a sense of community and shared identity within your product, you can create a more engaging and loyal user base.
Create dedicated community spaces: Implement forums, chat rooms, or social media groups within your product where users can connect, share experiences, and support each other.
Utilize gamification elements: Implement features like points, badges, and leaderboards to encourage participation and healthy competition within the digital community.
Make use of social signaling: Research shows that telling users about a feature that others are using or showing them product-related experiences that are popular with other users, can be highly persuasive. It taps into their desire to belong and conform, encouraging them to follow suit and try something new.
Ethically use scarcity, FOMO effect, and anxiety avoidance to drive retention
While you don’t want to overload your users with any negative messaging, you must make them aware of stuff they lose out on when they stay away from your product for an extended period.
The trick is to avoid focusing on the loss and instead highlight the positive value users gain by re-engaging with the product.
Focus on scarcity: If you can create an illusion of expiration, users will prioritize it. This is called the “Mere Urgency Effect” in psychology.
Our brains have been built to focus on scarcity. Our ancestors who lived in the wild had to contend with and compete for scarce resources. We carry that same trait – if we think that there is a shortage of something, we automatically perceive that resource to be more valuable. In the same way, urgent tasks or actions signal more immediate and certain payoffs, which makes users want to act.
Use the FOMO (fear of missing out) effect to drive action: You can make use of the FOMO effect ethically to drive user retention. Show users how others are using and benefiting from your product. Users are likely to wonder what kind of experiences they are missing out on if they don't log into the product and try it as well.
Humans are wired to avoid losses – it even trumps our desire for gains. Creating a sense of urgency can tap into this fear of missing out, motivating users to act before losing out on what they perceive as a valuable opportunity.
Show them how to avoid anxiety and stay in control: Notifications are meant to help, but too many can trigger anxiety. Instead of letting them pile up and languish somewhere in an inbox or behind a bell icon, use this as a chance to guide users back to the product and show them how to manage their notifications effortlessly.
You can talk about avoiding anxiety but also highlight the positive outcomes of managing notifications, like increased productivity, less stress, and a sense of control.
Show your users the potential downside of ignoring notifications – e.g., missed deadlines, forgotten tasks, etc. Frame it as a choice, it shouldn't sound like a threat.
Use the Psychology of Emotions to Drive User Retention
Emotions have the power to shape engagement and retention.
Positive emotions like nostalgia, curiosity, and belonging can build strong connections with your product. They drive users in. Negative emotions like scarcity, FOMO, and anxiety, when used ethically, can help your users remember what they are losing out on. They drive users forward.
It can also act as a signal to them that just because they haven't been actively using your product for a while, you haven't forgotten them and that you still value them.
While your user retention rate might just be a number on a screen, what drives that number is an ebb and flow of emotions. By understanding and responding to your users' emotions with empathy and creativity, you can transform your product from a toolbox that gets a job done into a launchpad for propelling your users’ professional and personal journeys.
References:
- Goldstein, Noah J., et al. “A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels.” Journal of Consumer Research, vol. 35, no. 3, 2008, pp. 472–82. JSTOR, https://doi.org/10.1086/586910.
- Zhu, M., Yang, Y., & Hsee, C. K. (2018). The Mere Urgency Effect. Journal of Consumer Research, 45(3).
