What are some growth hacks for user retention for SaaS startups?

By December 16, 2017Growth hacking

There is no magic bullet to Growth Hacking. The basic rule is simple: what works for one company will probably not work for you.

Trying to copy the Growth Strategy of Dropbox or Airbnb will not work for these simple reasons:

  1. You have a different value proposition.
  2. Times have evolved and consumers are better educated about the internet. Adding a ‘ps: I love you’ will not skyrocket your growth just like it did for Hotmail.
  3. Growth Hacks only work on products that are actually great itself, if your product sucks, no Growth Hacker will ever be able to help you out.

That said, the tools & tactics might change over time but there are things that don’t change over time which is the way we think , act and react.

Nir Eyal, best-Selling author of Hooked did a great job on how to use and implement habit loops into your product to increase your retention rate.

Understanding the hook-model

In order to increase the retention rate of your users, you need to get them hooked to your product or service.

The hook Model, developed by Nir Eyal, is a four-step process that, when embedded into products or services, subtly encourages customer behavior to come back to your service or product. Again and again, without depending on costly advertising or aggressive messaging.

The four-step process:

  1. Trigger
  2. Action
  3. Variable reward
  4. Investment
  5. Repeat (the more the better)

Trigger

The red number 1 popping up on your Facebook App, that’s what we call a trigger, it’s the actuator of behavior.

Important to know is that they come in 2 forms: external and internal.

All habit-forming products start by alerting users with external triggers, which is the red number next to your Facebook app.

External Triggers

External triggers communicates the next action the users should take.

  • Paid triggersSEA or other paid mediums. (Habit forming companies tend not to rely on paid triggers for very long, if at all. Because paying for reengagement is unsustainable for most business models, companies generally use paid triggers to acquire new users and then leverage other triggers to bring them back.)
  • Earned TriggersFree triggers cannot be bought directly, but they often require investment in the form of time spent on public and media relations. Favorable press mentions, hot viral videos, featured blogpost are all effective ways to gain attention. For earned triggers to drive ongoing user acquisition, companies must keep their products in the limelight – a difficult and unpredictable task.
  • Relationship TriggersOne person telling others about a product or service can be highly effective external trigger for action. Whether through an electronic invitation, a Facebook “like”, or old fashioned word of mouth, product referrals from friends and family are often a key component of technology diffusion.
  • Owned triggersThese triggers consume a piece of real estate in the user’s environment.. They consistently show up in daily life and it is ultimately up to the user to opt in to allowing these triggers to appear. For example: an app icon on the user’s phone screen or an email newsletter to which the user subscribes. As long as the user agrees to receive a trigger, the company that sets the trigger owns a share of the user’s attention. They become owned triggers only set after they sign up to continue receiving communication.While paid, earned and relationship triggers drive new user acquisition, owned triggers prompt repeat engagement until a habit is formed. Without owned triggers and user’s tacit permission to enter their attentional space, it is difficult to cue users frequently enough to change their behavior.

Internal triggers

When a product becomes tightly coupled with a thought, an emotion, or a preexisting routine, it leverages an internal trigger.

Unlike external triggers, which use sensory stimuli like a morning alarm clock, you can’t see, touch, or hear an internal trigger.

Emotions, particularly negatives ones, are powerful internal triggers and greatly influence our daily routines.

Feelings of boredom, lonelinesses, frustration, confusion, and indecisiveness often instigate a slight pain or irritation and prompt an almost instantaneous and often mindless action to quell the negative sensation.

Our life is filled with tiny stressors and we’re usually unaware of our habitual reactions to these nagging issues.

Postive emotions can also serve as internal triggers, and may even be triggered themselves by a need to satisfy something that is bothering us.

After all, we use products to find solutions to problems.

Action

The trigger has occurred, and you are now tempted to take action. In other words, the behavior done in anticipation of a reward.

The action in this case is as simple as clicking on the Facebook App and see what’s going on.

But what if your phone isn’t near you? You won’t have the ability to click on the Facebook Icon.

Or what if you see a notification of a stranger posting something in a group you joined last year, you might not have the motivation to click through.

Considering the ability and the motivation of the user is crucial when building the action phase into your product.

Variable reward

When opening the Facebook app, you have no idea what to expect. Maybe you are going to see your best friend’s pictures of their Holiday or maybe it’s just a cat barking like a dog.

In other words, what you will see is extremely variable.

Variable rewards are one of the most powerful tools companies can implement to hook users.

Research shows that levels of the dopamine surge when the brain is expecting a reward.

Dopamine, otherwise called the happiness hormone, plays an important role into getting your users coming back for more.

It’s the reason why we keep eating chocolate, play on slot machines and lotteries even though we know it’s not good for us or haven’t really gained any money doing it.

Introducing variability multiplies the effect, creating a focused state, which suppresses the areas of the brain associated with judgement and reason while activating the parts associated with wanting and desire.

Investment

If somebody would tell you that they had created a new Facebook that had a better interface or chat, would you switch to their platform?

Probably not. The reason is simple: switching costs.

Switching costs are the costs that a consumer incurs as a result of changing brands, suppliers or products. Although most prevalent switching costs are monetary in nature, there are also psychological, effort- and time-based switching costs.

Adding your friends & pictures again on this new platform, just don’t make sense.

This is the reason why the investment phase of the hook model is such an important factor, it’s where the user does a bit of work.

It occurs when the user puts something into the product of your service such as time, data, effort, social capital, or money.

ricardo ghekiere

Author ricardo ghekiere

A self taught marketeer with a limitless amount of humor.

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