Sunday, May 26, 2024

Intercom CSO wants to get the message out that retention is the new conversion in SaaS

It was probably the most important slide in Intercom exec Des Traynor’s presentation, and also the most memorable — probably because it had all the most popular marketing tactics pointing to a giant Poop emoji.

The chief strategy officer at customer messaging platform Intercom was trying to make a critical point to the many other software-as-a-service (SaaS) startups attending last week’s Collision conference in Toronto. While ads, content marketing and word of mouth are all essential to building a viable brand, a failure to focus on retaining customers means they are essentially flushing money down the toilet.

“Activity and retention is what makes your business successful, not signups,” Traynor told the crowd, advocating ‘net dollar retention’ as the metric to prioritize. He pointed to the one million who signed up in four days to use the mobile app Yo (now defunct) versus the one million Slack attracted over a 16-month period to make his point.

“Churn and expansion will define your business. You should be focusing on maximizing the things that will mean people stick around and use more of your product, or at least not quit.”

While this may sound like common sense at first glance, Traynor suggested too many B2B firms overlook it, or don’t treat it with enough attention. He recommended primary research based on interviews with four different kinds of potential users or customers. These include those who showed some kind of interest and then vanished, those who convert into a customer, those who cancel and those who are currently using a trial version.

The last group in particular will offer important insights. “That’s where you get the most energy,” he said.

Traynor argued the only customers most firms will onboard and retain will have a need, desire and capability to use a particular SaaS tool.

“No two of these is sufficient,” he said, pointing out that unfortunately, the look and feel of most onboarding experiences are painfully at odds with the marketing creative that attracted them in the first place. “It’s so simple to iterate on beautiful marketing designs . . . (but) if you can get them in and get them set up properly, it absolutely changes the dynamics of your entire business.”

This is something Intercom has learned first hand. When it first started attracting customers in 2011, Traynor said, the company required customers to cut and paste a piece of JavaScript code which it had embedded on a landing page. Eventually, however, some prospects asked Intercom if they could just provide a spreadsheet of the customers they wanted to target with its messaging tool.

As a result of the feedback, Intercom built a CSV importer mechanism that could speed up their ability to get started with its product. The result was a 34 to 40 per cent increase in funnel performance, Traynor said.

Intercom has since noted many other firms that have taken a similar route to success. Traynor pointed to Slack, which he noted ‘makes you use every single feature’ before you can begin collaborating with team members, and Apple, whose Apple Music service asks about styles and preferences up front to ensure it suggests the best additions to users’ libraries. 

A less-known startup called Coda uses an interactive walkthrough to show its product as its best. “That is so much better than dropping them onto a blank page and saying, ‘Go for it,’” Traynor noted.

Though startups have a reputation for being agile, Traynor said many firms can be hesitant to make big changes to things like onboarding. However he recommended against tiny optimizations and iterations.

“You should default to redesigning,” he said. “There’s usually a bigger, better way to do something, and it doesn’t involve a subtle change in a shade of green.”


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Shane Schick
Shane Schick
Shane Schick is the Editor-in-Chief of B2B News Network. He is the former Editor-in-Chief of Marketing magazine and has also been Vice-President, Content & Community (Editor-in-Chief), at IT World Canada, a technology columnist with the Globe and Mail and was the founding editor of Shane has been recognized for journalistic excellence by the Canadian Advanced Technology Alliance and the Canadian Online Publishing Awards.