Google: How can we reduce customer churn?

How can we reduce customer churn?

Irrational Labs did an experiment in one of Google’s call centers that drove retention for new advertisers

Keywords: behavioral economics, behavioral design, retention, engagement

The Challenge

Google AdWords users face the same problem as many dieters. No, they aren’t all trying to lose weight (that we know of) – rather, they don’t see immediate results from their efforts. As with any form of advertising, a user designs an ad, posts it, then waits to see how it performs. Will people click on it? Or will it be a dud? It’s not immediately obvious if they created a successful, engaging ad or a boring ad that people will skip over.

Getting good at creating ads often takes trial and error. A new user isn’t an ad-creating prodigy the first time they make an ad. That’s normal! Their first ad may not see great success, but if they learn from it they can start making their ads progressively better. Whether in a week or a month, they can create consistently compelling ads if they keep at it.

However, it’s hard to do something difficult and not see any immediate result from your work – whether it’s dieting or advertising. Without seeing immediate, positive ad results, some new AdWords users were churning in their first two months using the product. Irrational Labs jumped in to help explore solutions.

Hypothesis

We needed to close the intention-action gap – the difference between what people say they want to do and what they actually do. Humans naturally have limited attention spans. We want to make successful ads, but if we don’t see good results quickly we get discouraged. We hypothesized that converting AdWords customers from a short-time mindset (I need to see results ASAP!) to a long-term mindset (I am investing to get a great return in the future) would lead to a higher retention rate.

Process

We tested this hypothesis within Google’s call center. When new AdWords customers called for the first time, we randomly assigned them into one of two groups. One group was business as usual – they were the control group. The other half of the new callers – the treatment group – was told they got to participate in a special plan. They were part of “My 3 Month AdWord Expert Access Plan.”

We specifically chose three months to create a long-term mindset at the beginning of the callers’ AdWords experience. Instead of expecting a perfect first ad, now they would have a mental benchmark that advertising requires time to learn. Over time, they could figure out which value propositions, keywords, and creative content work best.

During the call for those in the treatment group, AdWords representatives repeated the “three months” phrase often and asked customers about their long-term advertising goals. The expert then set up a series of five future calls that would be used to help the customer optimize their account for free. On the first call, the customer pre-committed to these future dates, further cementing the idea that this was a product that deserved a longer-term approach.

Results

Success! The group that had the three-month program stuck around longer.  Retention rates for AdWords users in the “3-Month Expert Access Program” group increased by 14 percent.

Interested in applying behavioral science?

Read More Case Studies

Product Design

We use the psychology of decision-making to create innovative solutions that drive behavior change.

Research & Prototyping

We use a variety of rigorous tools to assess what to build and how.

Marketing & Growth

By understanding customer psychology, we accelerate growth and retention.