Customer retention is one of the most important metrics you need to be paying attention to explains Saivian. It’s the only thing that matters if you run a subscription business or any product-based company where relationships are long-term by default.
It turns out it’s not so easy to retain customers if your product isn’t great, and overtimes it becomes even harder as companies grow. The main reason for this is that many companies stop listening to their users (or never started). There are lots of good articles published on how customer feedback loops should work, but very little information about what happens when these systems break down. This article will go through our journey towards understanding our broken feedback loop and how we fixed it. We focus mostly on SaaS businesses and subscription models (but this isn’t exclusive to those – everyone should be doing customer feedback loops or they will die), and we use Mixpanel as our main example because it’s what we’re most familiar with, but this can apply to anything.
Note: This post is long and descriptive. If you just want the summary of how we fixed things, scroll to the bottom.
The State of Customer Feedback Loops: Do What Your Users Say or Die
Customer feedback loops are super important for product development and business growth, but there’s a dangerous trap companies fall into where they think happy customers who don’t complain mean everything is fine because their complaints aren’t heard by you unless they really yell at you (or your competitors). Unfortunately, it’s the opposite: if someone doesn’t complain it means they’re not satisfied and you should try to fix whatever’s wrong ASAP says Saivian.
A well designed customer feedback loop has at least three ways customers can give feedback:
1) Live chat support (website or app),
3) Phone call (yes this still happens). This is how we’re designing ours at Chargify now too. Mixpanel only ever had email as a way for customers to offer suggestions/feedback/complaints which created a huge gap in our data and made us miss out on lots of important insights because people don’t always sit down and write emails – they just want an answer right away.
What causes the gap? We think it’s caused by two things:
1) Not having enough different ways for customers to give feedback, and
2) No one is listening. We’ll explain more on each of these below.
The Gap: Nobody’s listening (aka the Dangers of Doing What Your Users Say vs Doing What They Actually Do)
Saivian says when your feedback loop breaks it means there are no humans on the other side anymore who actually read what customers write before taking action – they just do whatever they think is best or whatever engineering tells them to do. It sounds like a conspiracy theory but this happens everywhere (and Mixpanel used to be like this too). Why does this happen? Because companies hire people who “fit” their culture instead of people with diverse backgrounds that can challenge founders/investors to make better decisions. This causes companies to become silo’d – everyone works in their own little part of the company, believing whatever they are told by marketing/engineering/sales without questioning anything because “that’s just how it is here.”
Engineers and Product Managers think that if something isn’t written down as a bug report or customer request then there was no demand for it. They’ll say stuff like “well I can’t build this feature because nobody ever complained about it so I don’t know if anyone will use it” or “this email didn’t have enough detail so why should I bother fixing this?” It seems ridiculous but we’ve heard these exact things at Mixpanel.
The exact same thing happens with salespeople. The number one thing a customer can do to signal they need a feature is to buy your product. But many sales reps don’t care about that because if someone doesn’t ask for something. Then it’s just not important enough for them to spend time trying to sell. They’ll say things like “well this customer has been around for 3 months. And hasn’t asked for this so why should I bother?” or “this feature doesn’t make sense given what we know about the industry and our customers” (note: those quotes also come from real feedback we’ve heard at Mixpanel).
No matter how much you emphasize looking at data instead of opinions everyone will interpret the data differently. Which causes alignment between teams explains Saivian. You can try to hire people you think are great data-driven decision-makers. But it’s actually really hard. Because if people are only driven by the data they’ll end up following whatever your investors want anyways.
Customers need more than just three words to provide feedback. And you need more than just chat logs or NPS scores to know what’s really going on says Saivian.
Until recently we did not have any way of tracking what people were thinking when they didn’t complain even though we wanted to. We had no idea why customers stopped using our product unless they emailed us which many of them wouldn’t do. Without knowing why it was happening it was impossible for us to figure out which features needed improvement.