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Lowering churn will increase your acquisition rate

How to improve the viral score of your app/site by focusing on existing users.

The startup desert

You’d have to be pretty crazy to waste water while crossing the desert. You’d have to be even crazier if you do it after voluntarily placing yourself in that desert. With a limited amount of water. When you’re in a barren wasteland, your water is your most important resource. Without it, you die. The same is true for startups if you replace water with users. Everyone knows that without any users, a startup is.. erm… dead in the water.

Companies and small teams of people work furiously to capture the attention of visitors, to aquire users, and to get them engaged or signed up. Generally speaking, the more users a startup has, the longer it can survive in the desert of business. The problem is that every single project that enters that desert does so with a leaky bucket of water.

It doesn’t matter if you’re going in as an app that serves to be the Xerox for papier-mâchés, or if you’re going in as Apple. Your bucket has holes in the bottom. Your precious resource is being drained the moment you get your first drop. Your job is not only to keep filling that bucket, but to plug or diminish as many of those holes as possible.

Plugging the holes

Your team can view customer acquisition from the perspective of the marketer, or from the perspective of the retention officer. The marketer sees a person signing up to your service, or downloading your application, as the final step in the funnel. The retention officer sees that milestone as the beginning of the customer’s journey.

There are so many ways that you can plug these holes. You can make your app easier to understand, you can improve your customer support process, you can implement suggestions from user feedback. The list goes on. But how you’re ultimately plugging this hole is by reducing churn. Churn is the measure of the amount of users you lose. That’s the water leaking from your bucket.

Filling the bucket

The water-user metaphor kind of falls on its face here, but suffice it to say that it is a rare thing for anyone to start recommending your startup 5 seconds after they’ve just signed up for themselves. A person needs to find your solution valuable or entertaining before they even consider telling their friends about it.

So ask yourself this, does bombarding a visitor with a newsletter sign up form make sense during the first minute of their visit to your site? Does asking a user to review your app in the first few minutes make rational sense? Is there a point in cluttering the screen up with social sharing icons a good idea when a person has barely interacted with what you have to offer? The answer is usually no.

Your pleas for recommendations and reviews should form part of your user onboarding strategy, and they should be towards the end of that journey. The end is where a person starts to appreciate the value they get out of interacting with your platform.

Once you’ve polished your app or your site enough to ensure that people are getting value out of it, you can start focusing on improving how “viral” your platform becomes. How viral something is, is measured by something called the K-factor. More accurately, the K-factor is used to describe your growth rate. The steady state for this factor is when its value is 1. Any higher and your app is viral in nature. Any lower and it means that there is a decline in the viral nature of your site or app.

Increasing your K-factor

The formula for this number can be derived by multiplying the number of invites or recommendations by the conversion rate of new entrants. Your conversion rate is improved by how well you fill your bucket, and your invite count can be improved by leveraging the excitement of your existing userbase.

Just like viruses in the natural world, the K-factor of your site’s distribution will measure the average amount of people that any one of your users will message while they are still in the “infectious” stage of excitement about your app. That stage is usually the “aha” moment, or the period of time when they discover the first bit of value. The best way of increasing that excitement, or at least keeping it alive, is through re-exposure.

The longer that a user will spend using your app, the more likely they are to talk about it. That just makes sense. A person that spends zero time on your site will almost certainly not talk about it, or at least not in any good way. Whereas a person that spends all day on your site will almost certainly be telling people about it. Therefore it’s essential to keep pulling your users back in.

It’s also important to realize that the length of a user’s stay doesn’t have any correlation with level of “infectiousness” they feel. But it’s safe to say that once they permanently bounce away from your site, their infectiousness drops to 0. All hope with that person as a message carrier is gone. If they stay around, their infectiousness may drop below 1.0 or maybe even to 0, but because they are still around, the probability of it rising again is non-zero.

Retain your users

So if one way of increasing your viral score, or K-factor, is to retain users then the obvious thing to do is to tackle your churn rate. The conclusion that you can draw is that you will gain new users by retaining the ones you already have.


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