Web companies hate to lose customers. The cost of acquiring new customers is high, and engaged users are the revenue-generating lifeblood we all desperately need to keep going.
We put a lot of effort into creating new content and building new features to bring value to current users and entice them to stay. when the user Doing Leave it, the prevailing wisdom is that there must be something wrong with the product. We build a cancellation questionnaire around this assumption, with options that are largely product-focused.
A product-centric approach to fixing every problem by treating it as product-related. But what if the problems are more complex than simple improvements to content or features?
An engineer I used to work with said – and this is incredibly insightful advice for product managers – “People are complicated.”
I work for a video-streaming service with a monthly subscription model (similar to Netflix). A few months ago we conducted a survey with a group of users who had canceled the service. We asked about satisfaction in three product areas: usability, content (video), and accessibility (can you use the service on your favorite devices). The results were surprising. Even users who canceled the service rated their satisfaction high All three areas, And their overall satisfaction with the service was rated just as high. Needless to say, we were shocked. Why would someone cancel a service they were extremely satisfied with?
It wasn’t until a few weeks later, when I was reading Daniel Kahneman’s book, thinking fast and slow, That answer became clear.
What satisfies someone?
Kahneman, a psychologist and Nobel laureate in economics, devoted a significant portion of his book to examining the psychological underpinnings of people’s decision-making. The part that particularly struck me was the discussion of the way the utility of an item affects our desire for it—and ultimately, how it affects our satisfaction.
The utility of a commodity is defined as its perceived ability to satisfy a need or want. The more useful a thing is to a person, the more satisfying it is to him. Kahneman explains this from an economic perspective:
gift of 10 [dollars] has equal utility to someone who already has 100 [dollars] as a gift for 20 [dollars] For someone whose current assets are 200 [dollars], We usually talk about change in income in terms of percentages when we say “he got a 30% increase.” The idea is that a 30% increase could produce a fairly similar psychological response for rich and poor, which a $100 increase would not.
To extrapolate, a $10 gift is of less utility (and satisfaction) to someone who already has $200 than someone who only has $100. The basic concept is that everyone who is considering buying a product weighs its perceived usefulness against its cost. If the utility seems high enough to justify the cost, the consumer is more likely to buy.
So, a client comes to your service. They weigh utility versus value, choose to buy it, and are satisfied with the experience. Why would they still decide to cancel?
This is where things get interesting. The original idea, put forth by Daniel Bernoulli in 1738, emphasizing the role of utility in decision-making is actually flawed. It holds that it is the inherent utility of a commodity that satisfies a person more or less – that if you and I both had $100 we would be equally satisfied based on the inherent value of $100. As Kahneman shows, this assumption is wrong:
Today both Jack and Jill have assets of 50 lakhs.
Yesterday Jack had 10 lakhs and Jill had 90 lakhs.
Are they equally happy? (Do they have the same utility?)
It’s pretty clear that Jack will be shunned and Jill shunned – even though they both have $5 million, which should have the same underlying utility. As Kahneman says:
Jack and Jill Experience Happiness [actually] The relative various states of wealth are determined by their recent change in wealth which defines their reference points (1 million for Jack, 9 million for Jill).
This was my aha moment.
Satisfied people aren’t canceling because the underlying value of the product has changed. What has changed is the utility they experience in that moment, based on their current life situation.
The organization I work for has a simple questionnaire as part of our cancellation process. One of the options customers can click on to tell us why they canceled is the “Other” option, which is an open text field. As I went back through the responses, I noticed some consistency:
The tour will return for the summer.
I have lost my job, but will come back when I get a job.
I have heaps of books to read.
These “other” reactions had previously slipped under the radar, but now they were coming through loud and clear. Hoping to keep customers on a path of continuous engagement overlooks the fact that people have lives beyond your product.
Our current approach to customer retention – product improvement – recognizes that the inherent value of a product is that which satisfies. We are making the same mistake Bernoulli made 200 years ago. what we’ve found is that, often, people Huh Satisfied with the product but a change in their life situation temporarily reduced its perceived usefulness. This reduction turns the utility versus cost equation in their mind.
Not all cancellations are created equal
Don’t get me wrong, product improvements help the overall experience. They are an important piece of the puzzle, but they are not a silver bullet for increasing customer retention.
We should redefine “retained customer”.
Loyalty does not mean that the customer should stick with you indefinitely. If a user cancels to visit, then comes back to the service a month, or two, or three months later, have you ever really lost them? Canceling is just canceling if they don’t intend to come back.
The goal of any business is to create a great experience and meet the needs of its customers. What if we accepted and respected the fact that people have lives outside of our products? What if we are designed for the fact that the utility we provide will ebb and flow as their life situation changes? How do we structure our products to support this?
Spotify starts down this road with the cancellation process. They include the option to say you are traveling and then, before you make the final decision to cancel, provide a good explanation of how they can support your travel. Here’s what it looks like:
However, Spotify’s approach to user feedback that “I’m trying to save money” tries to convince the user that Spotify Is The best use of his or her money, which I would argue does not respect the user’s need to manage their current life situation.
Think: User-Centered Retention
Take the time to identify external events that may temporarily affect the usefulness of your product. Then, develop a retention strategy around those events.
Is your product affected by the nice summer weather when people want to spend more time outside? Instead of fighting it by convincing them to come inside, develop features that help your users take advantage of the season – or features that encourage them to take your product along. Or, accept that summer can be short and focus on crafting cool materials and amenities for when the temperatures drop. TV networks get it. Summer is the time to run again.
If you have a cancellation questionnaire, structure it as user-centric as it is product-centric. Instead of pushing your users down a specific path, give them the option of telling you why they’re going. You can learn something.
Don’t assume that everyone who leaves is a dissatisfied customer. Sometimes, life happens. If you make it difficult for people to leave when they need to, or nag them to come back before they’re ready, you run the risk of disappointing someone who would otherwise have come back on their own.
Instead, respect that your users need to manage their own lives. Understand that your product is only a part of their life, and you will be rewarded with loyal customers who return again and again.