After launching your product and acquiring your first customers, it’s time to work on the most important growth metric a business can focus on: customer retention.

When growing a startup, many founders prefer to dedicate time to acquisition strategies and forget about retention – after all, they’ve already won the customer over, right? Wrong. Your customer churn rate (the percentage of users that don’t return) is an essential and often overlooked metric. A high churn rate can be an indication of many things, the worst being the dissatisfied user never quite ‘got’ your product.

No matter how useful a product might be, if a user needs to struggle to find its value, chances are you’ll lose them along the way. Confusing user flows, clunky interactions or too many features can lead to a fractured user experience.

Reducing the complexity of your core user experience allows your product to shine forth and resonate with new users. When you get this right, it’s what we call in the UX world a Magic Moment.

What is the Magic Moment?

The Magic Moment, also known as the “a-ha!” moment, happens when a customer truly understands what your product can do for them. It’s a purely emotional reaction toward a product that they’ve connected deeply with. It’s the moment they get what your product is all about, how cool it is, and start coming back for more.

Each company has its own unique Magic Moment, describing the time it takes for the customer to realise the actual value of a product. The concept has been around for some time, but it was popularised by a lecture by Facebook’s VP of Growth Alex Schultz back in 2014.

As an example, let’s pick a social network. You can do a number of things on social networks nowadays, but essentially, connecting with people you know is the number one goal of their product. Users sign up for social networks to interact with other people. If they don’t do so as soon as possible, they won’t feel the urge to come back, increasing bounce and churn rates.

How can the Magic Moment influence user retention?

The Magic Moment is deeply correlated to user experience design. Good designers will create experiences and craft user journeys with these points in mind. Different design decisions can then be tested for effectiveness during the user testing phase.

The “a-ha!” moment doesn’t necessarily happen when the customer subscribes or pays to use your product, or even when they come back for a day or two. It’s when a casual user becomes what we call “forever users”.

“Forever users” are the ones who became loyal to your product and won’t leave anytime soon.

In simple words, the Magic Moment happens when users get hooked – and that’s when they become product evangelists, spreading the word about your product. You should aim for this transformation to happen as early as possible during the user journey.

Time to Value: an essential metric to identify your Magic Moment

In order to identify your Magic Moment, it’s important to understand the concept of Time to Value (TTV) and how it’s calculated.

TTV is the time a customer takes to realise the value of your product, which is different from how long it takes for customers to purchase your product. The goal of this metric is to help you understand how long it takes for them to get hooked. The countdown starts right after their first interaction with your product happens, and completes at the Magic Moment.

When you have your internal definition of “forever users”, you will also be able to see users who almost became “forever users”. Those users that were very close to becoming “forever users” but for some reason didn’t take the plunge. Analyse their behaviour and you might be able to understand the exact moment you’ve been losing prospects that had the potential to become loyal users too.

Long live customer retention

It may sound crazy, but most companies are so focused on getting new customers that they forget about the most important customers out there: the ones already with them.

Happy customers don’t just keep using your product, they tell their friends too. Low churn combined with a high rate of referral is a sure recipe for success.

In the words of Alex Schulz, “Retention is the single most important thing for growth.” Find the Magic Moment of your product and turn curious leads into product evangelists.

Debbie Corrano
Marketing Manager