The customer community: harnessing the power of sideways communication

In a world with more customer choice than ever, retention has become one of the key business metrics – especially for SaaS businesses. A commonly quoted statistic is that it can cost five times more to attract a new customer than it does to retain an existing one. More recently  research done by Bain & Company shows that increasing customer retention rates by 5% increases profits by 25% to 95%.

The rise of retention as a buzzword has driven the growth of specialised customer success teams whose key responsibility is to track, manage and improve customer experience in order to minimise churn and drive upsells. However, there is rising interest in the use of community to reduce churn, helping customers solve their own problems.

The traditional retention model

For any business selling recurring services, retention is key to growth. The longer you can hold onto a customer, the longer you can generate revenue from them and the greater their lifetime value. In recent years, this has led retention experts to monitor the customer experience in ever greater detail to close any gaps in the customer funnel.

This has also led to rigid control over communication flows throughout the customer lifecycle in order to ensure maximum effectiveness of acquisition, retention and upsell efforts. Within apps, communication channels are usually directed up and down only, between the business and the customer.

For example, consider the ‘help’ button that directs users to a list of approved FAQs, connects them to a chatbot or creates a Zendesk ticket so that the customer service team can help solve the issue.

By controlling communication, you can direct users to the most useful information and, theoretically, reduce the time spent looking for a solution. However, this approach limits one of your most effective tools for retention: other customers.

The power of community

Old age saving circles are now starting to become digital. Saving circles are where a group works together to save money and achieve their financial goals faster than they would alone. For example, 10 people who each needed to save £5000 for a housing deposit would work together for a 10-month term, each contributing £500/ month. Each month, one member of the group would be selected at random to receive that month’s pot, instantly reaching their personal savings goal.

Key to the success of this model is using communities to drive good behaviour on the platform. Not only does this build in social obligation, it also creates a support network to keep savers on track.

This approach requires opening up communication within your app, going from user-app communication flows to customer-customer. One of the classic ways of doing this is a customer forum. Businesses have found that creating a proactive environment for customers to ask questions and find answers can lead to a 50% reduction in support tickets.

As well as reducing the load on your support team, communities improve success of users on the platform. Saving in groups increases the chance of success for users to reach their savings goal sooner than they would have done alone.

The challenge for developers is to provide the right channels to enable productive communication. While your app may have super-users that answer between 30 and 50% of all community questions, not all users will want to get involved. Sometimes your customers may want to speak straight to a member of your team, or find the solution themselves. Your interface and tools need to make these options clear, as well as providing clear advice for those who don’t know what they want at all.

If you can connect your users in the right way you can create a more scalable approach to customer success, creating a support network that grows as your user-base does.

Thinking sideways

Widening communication from traditional channels raises new challenges about security, customer experience and privacy and it may not suit all apps. However, for those developers who can create targeted engagement experiences it creates the opportunity to offer more than a platform to customers.

You can increase efficiency, retention and satisfaction by giving users a community experience that connects individuals through shared experience and shared success, for your app and for them.