Hiring for Company Growth & Customer Retention with Amplitude | Building a Team for Growth #3
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Hiring for Company Growth & Customer Retention with Amplitude | Building a Team for Growth #3

January 8, 2020

People think of growth they always think
top a funnel, and I think the industry is starting to evolve now where people
understand that like there’s really no point in filling the top of the funnel
if you have a leaky bucket. If you’re gonna focus on retention the first thing
you have to think about is how are you delivering value to this customer? And if
you’re not delivering value to your customer, then no series of hacks or
changes is really gonna matter. Hi everybody! My name is Luke and we’re
back this time to talk about the retention growth team.
Plus, we interview Justin Bauer the VP of Product at Amplitude. Retention is the key metric that will make
or break 80% of businesses. SAS, e-commerce, marketplaces, apps,
services and subscription models their growth depends
on strong and healthy retention. Daily, weekly, monthly and yearly active users
or customers are the lifeblood of these companies. The thing with retention as
well as it’s a tricky metric to improve it’s deeper down in the customer journey
and it’s normally product driven. To retain customers, normally retention
teams focus on improving product features or changing onboarding flows a
non-technical retention team will try and improve retention by using emails
and notifications. However, as retention is deeply
associated with the product more developers and more data are involved.
Therefore a retention team normally grows through extra development power,
UX skills and data scientists. So why does this team require more developers?
To run effective experiments the first obstacle for the retention team is to
align closely with the technical department to build testing processes
into the IT infrastructure from day one, and to allocate one or more team members
to the retention growth team. Experiments on retention need additional analysts
as the data is more complex, harder to clean up and manipulate.
Analysts will focus on the difficult tasks of correlation analysis, modelling
attribution, measuring the statistical reliability of experiments and coming up
with reliable experiment outcomes. The growth data scientists in the team also
enable the team to come up with new ideas based on the quantitative data
they manipulate. In other words they give you insight into the data they’ve collected
and help you run more effective experiments Now let’s hear from Justin, the
VP of product from Amplitude He talks about the importance
of retention and common mistakes to avoid. As always we’ve included a
downloadable guide on the link below which also includes the retention
playbook from Amplitude. So how does Amplitude approach growth
as a company? We are an enterprise B2B company.
Our sales model is actually through sales people.
We still have a growth team, I think we’re actually still figuring
out exactly what that means in enterprise sales but we still use a lot
of the same tactics that you would have with in growth organizations. When we
look at user acquisition, we’re taking a much deeper look
than just what’s like a CPI cost per install or cost per acquisition, but
understanding for that account what is the lifetime value of that account.
And that enables us to think about how much to spend when we’re doing user
acquisition. We build out a lot of technology to help nurture both
prospects before they actually end up purchasing Amplitude. And then we do a
lot of effort obviously on the product side about how do we increase both our
net retention but also our user retention. We believe that user retention
is a leading indicator of account retention so it’s really important
to focus on both Who would look after that,
the sales team or the growth team? So, the growth team builds the
technology to drive that. The sales and marketing team
are the ones that actually act on it so we’re trying to apply product in growth
mindset towards go to market which in enterprise B2B has traditionally not
been done but we still have marketing teams, we still have a sales team we can’t
ignore them. We’re not gonna automate all of that. So it’s more about how do we enable them
through technology to do a better job. When we talk about building
teams we want to think about who do we need to hire or what skill set do we
need to bring in inside internally inside the organization to help us on
retention maybe you can help us giving you some ideas on that? First off, if you’re building out a growth team or a product team I think the most important
thing is people that are driven for impact. They want to see results and that
is what they live and breathe off of and they want to be measured on how well
they actually drive a metric that matters. That just is an overall kind of
way that they look at the world. That’s super important. Then there are some like
actual like tactical skills that I think are really important… it is a
quantitative field. If you’re going to be understanding retention you need to
understand users and you feel very comfortable with the tools of the trade.
Obviously Amplitude is one of them and so I think you have to… usually you are a
person who’s really embracing that but at the same time you also understand the
qualitative side. You can talk to users to understand and you have a great
mental model of how the world works. Because that’s gonna be how you’re gonna
come up with all the hypotheses that you’re gonna test. Because really it’s
about bunch of hypotheses figuring out which one’s the most viable ones, how do
you move quickly through them, which ones actually have impact on the metrics, and the
ones that don’t, diving into the data understand why. It’s this kind of way of just
you’re constantly just curious and trying to figure out how to create
impact. So if that’s your mindset I think, like those are the types of people
that I look for. Those are the types of PM’s and growth people that I hire within my team.
You see that and like people to start companies And so we actually hire a lot of people
who start companies. You see that in people
who come from industries like gaming where metrics are really important but
they haven’t just been solely focused on metrics but they actually have examples
of building real products. How does Amplitude work on retention?
So what’s the process? You start with the core problem,
so you’ve got what we call a Northstar metric. We’re trying to drive what we call weekly querying users
and then I have one POD, that’s kind of what we call our product development
groups, that is focused on empowering novice users to learn how to use Amplitude Leading indicator metric is first-week retention.
As I mentioned before it’s really important to understand that retention is a hard
metric to move, and there is no silver bullet. And so what we do is we identify
what are the leading indicators of retention. And that’s typically aligned
with our strategy. Our strategy right now, that we believe is the way to learn
Amplitude is to actually see someone else who has used Amplitude and then
pivot off of their chart. They do what we call valuable consumption, and we measure that. And then we have tactics to actually drive that. So we’ve released
features, we’ve made changes to the product, some failed, some succeeded
at improving that. As that metric has gone up, we’ve started to see retention go up, because it takes time for the retention metric to change. And so that’s like, one
of the things that I definitely recommend for everyone to understand is
like, what are the leading indicators of retention? We actually came up with a
whole framework that we developed with a number of our customers, many of which
actually came from the gaming space and it’s a way to basically segment your
users by the different stages that they are at. And we found that by
understanding that, then you can actually improve retention in multiple ways so
most people when they think of retention they think just of like the very
beginning parts of retention, and that’s really important.
And we call that New User retention but that’s not the only part of the
retention curve that matters. You can actually raise up, kind of, the broader
parts of your retention curve by focusing on we call Current Users and
Resurrected Users. Current Users are users who used your product in the
previous period. How many of them then came back the next week? And that
actually, we call that the Current User retention portion of your curve. If you
can improve that then you can actually see huge growth within your overall user base. And then the final part of the curve is what we call the Resurrected User
retention. So it’s those who are now dormant. They have used your product in
the past but have now dropped off. What can you do to resurrect them? And you can
see massive ROI in actually sending them a reengagement campaign with some new
part of your product or something new that you have fixed saying hey, we
actually have implemented these new features, we would love to have you come
back. Or, actually giving them like coupons or things like that to say hey,
we saw you loved us in the past, here’s five dollars off. We actually
worked with a pretty large client of ours in the US and discovered that it
was actually better for them to send someone a five dollar coupon to reengage
than actually to do the same amount of money on new user retention. So they
actually shifted a good portion of their acquisition budget towards reengagement
and it had a massive impact on their retention. And for that product, retention
was tightly linked with revenue so it actually made them a lot of
money by just doing that one thing. So that’s why we broke them out because
there’s actually very different tactics depending on whether you’re trying to
improve New User, Current User or Resurrected User. Some of those tactics that you can
use, how do you understand your users in each different segment, and ultimately
increase retention in each. The next one people want to know is kind of how you work inside the organisation: do you work in sprints or..? We use kind of more of a
Kanban model so we have our overall objectives that we’re trying to drive so
those typically get defined in a quarterly basis. So that would be like
overall retention, week one retention what we’re trying to drive. And then
we have six week kind of key results that we’re trying to drive so that would be
the valuable consumption metric. And I align with the pod on those metrics like
how much do we want to see is an improvement there? The pod has full
autonomy and they can figure out what they want to do to drive that. So they will do
a balance of long-term and short-term bets against that, and it’s up to them…
I’m obviously aligned with what the strategy is, but honestly it’s really up
to the team then to run quickly and so for some teams, one six week iteration might
choose we’re gonna do a bunch of, like, quick hitter experiments. Because we want
to see what we can learn, and see what happens from that. Other teams will say
we want to put the whole six weeks towards this, like, big bet because we’ve
done a bunch of experiments earlier, we feel conviction behind it and now we’re
gonna do a pretty big feature for a six week period. It kind of just depends on
what stage each of those teams are at to make that call. We do try to keep things
relatively small so ideally you’re shipping in like a one to four day
iteration so like if we did a big project that, like, Team Spaces, this
feature I mentioned before, was a six week iteration. But we didn’t just,
like, drop all of it six weeks in. There are a bunch of features that we’ve built
out, and then we have beta teams that basically are using that giving feedback
while we’re building it out. So from your point of view, what are some of the most
common mistakes you see from companies focusing on, maybe the wrong thing when
it comes to retention, and how to avoid them? I mean the first most common thing
is not focusing on retention as we talked about. So people think of growth,
they always think top of funnel. And I think the industry is starting to evolve
now where people understand that, like, there’s really no point in filling the
top of the funnel if you have a leaky bucket. If you’re gonna focus on
retention the first thing you have to think about is, how are you delivering
value to this customer? And if you’re not delivering value to your customer then
no series of hacks or changes is really going to matter. And then once you feel
like you are delivering great value, now growth can come in. You start to see
your retention curve flatten out – that’s a great signal that you actually have
product market fit with a subset of customers, and now it’s about how do we
get this value to more people? And then there are a bunch of tactics that you
can use to do that but you got to start there. So, Justin thank you very much and
it’s been really useful. I know myself I’ve learned a lot in this very short
interview. And for those of you that are watching, if you’ve got any questions about
retention just put it in the comments and we’ll get back to you and we’ll also
include the retention playbook that we mentioned in the downloadable resources
at the end of the video.

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  1. Retaining customers could be far more valuable than bringing new ones once we're at the growth stage. Learning how to measure and optimise for retention is a must 🙂

  2. According to your description of the data scientist involved in retention, it seems much like a Type A data scientist: Analysis and Insights. The developer probably helps with the 'Building' part.

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