2 Simple Steps For Testing If Your First Customers Like Your Product

Entrepreneurs are laser-focused on developing a startup product that customers love and use. User subscriptions and payments are two strong signals that prove the viability and validation of your idea. If you built a product that customers find interesting enough to try, you are one of the few to see the light at the end of the tunnel. What matters next is whether your customers find it valuable enough to return and use it again. 

To grow sustainably, you first need to identify your product’s moment of truth when a customer first discovers the value of your solution and the tipping point in their product experience, which can ensure continued retention and engagement with the product. The retention tipping point is different for every product. For Dropbox, it’s when a user uploads a file in one folder on one device. For Slack, it’s two thousand messages exchanged between a team, and for Facebook, it’s a user connecting with ten friends within seven days. 

To figure out your product’s Aha! moment, you need data and observation. Follow these two steps to measure customer retention and understand how your users feel about your product. Consequently, you will be able to run the right tests, ask the right questions, and make educated adjustments.

1. Ask The Customer

Although data can say a lot about customer behavior, some answers cannot be obtained without listening to the customer. Entrepreneur and marketer, Sean Ellis, suggests asking a simple question to understand how your customers truly feel about the product: How would you feel if you could no longer use the product?

  1. Very disappointed
  2. Somewhat disappointed
  3. Not disappointed
  4. I no longer use the product
Recommended For You

If 40% or more of your respondents would be “very disappointed” if your product no longer existed, you have a strong indicator of a potentially scalable product that is perceived as a must-have for your buyers. And if less than 40% feel an urgent need for your solution, you can use the insights to understand why your customers feel this way.

2. Calculate Customer Retention

What the customer says, should be consistent with what the customer does. The first test allows you to understand how the customer feels while retention metrics help you verify the results of the first test.

Retention is measured in cohorts by focusing on a set of customers who started using your product in a given period (day, week or month) and tracking those that returned. The higher the percentage of returning customers, the stronger the indicator that people who tried your product liked it and returned to use it again.

Most of today’s analytics platforms will automatically calculate the retention rate for you. If you want to run the numbers yourself, simply divide the number of active users who still use your product in your chosen period by the total active users at the start of the period. For example, in a subscription product, to measure retention one week after joining, divide the number of subscribers who still use the product one week later by the total number of customers who subscribed on day one.

Often, product retention varies by period. For instance, retention can be high in the first week but lower in the fourth. Or you may realize that you lose most of the new buyers, however, those who give it a chance for a few more days, eventually stick for longer. This is where conducting retention analyses over different periods can help you figure out where the issue is and what you need to do to fix it.

Finally, remember to dig deep. Assume only 15% of your customers indicated that they would feel very disappointed if your product no longer existed. While this may be true, it is also possible that the majority of the respondents are not your ideal customers or early adopters

Low retention numbers don’t always mean the product is not useful enough for your customers. The numbers may be high for one group but lower for another, potentially suggesting a bigger need by a particular target, perhaps, your ideal segment. Furthermore, carefully analyzing the causes of low retention could simply mean a call for help by your customers seeking an imminent change.

Let’s block ads! (Why?)

Forbes – Entrepreneurs

Leave a Reply

Your email address will not be published. Required fields are marked *