Improving Retention Through the Power of Community

Reid DeRamus

May 25, 2023

Welcome to a fresh edition of Growth Croissant! 🚀 🥐

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and now Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

We’re continuing our multi-post series on improving retention — one of the best ways to drive enduring improvements to customer lifetime value (“CLV”) and long-term revenue growth. Here’s a summary of what we’ve covered on how to improve retention:

Growth tactics that help retain folks that are not sure they want to cancel.
Better onboarding to connect new subscribers with your value proposition.
Using audience surveys to identify your core audience and 10x the degree to which you solve their problem.

Let’s cover a few ways to drive better retention through community-strengthening features, like allowing customers to earn status and the power of inside jokes.

Earning status

We’ve discussed why people buy products, including more emotional motivations (e.g., badge value, affiliation/belonging, self-actualization). In those cases, customers are probably less interested in discounts, free months, or special offers; they are probably much more interested in symbols of appreciation and something they can wear as a badge of honor to showcase their support within the community.

To show us the way, let’s look at the interactive live-streaming platform Twitch, which allows subscribers to earn status within a streamer’s community. These status-building features permeate and define the product experience.

Subscriber Badges are the most prominent symbol of loyalty and fandom within the Twitch product. Twitch allows subscribers to earn different badges the longer they remain a paying subscriber. A subscriber’s badge automatically changes the longer they pay, but if the subscriber cancels, they lose their badge. As shown below, the streamer can customize their badges, tailoring them to their channel.

Streamers can also allow subscribers to earn special flair on their badge if they upgrade to higher-priced subscription tiers. The flair allows your most passionate, loyal subscribers to stand out even further.

Of course, none of this matters if subscribers can’t show off their badges. One of the most active parts of the Twitch experience is the live chat at the side of the stream, which brings together the streamer and community of viewers. Live chat is the main forum where viewers can show off the badges they earn.

Twitch Chat hovering over a Tier 3, 2.5-Year badge.

In addition to showing off badges in the live chat, Twitch enables viewers to buy Bits, which serve as a way to “cheer” during the live stream. While Bits may be more about driving additional revenue per subscriber, they may also benefit retention by allowing a deeper connection between the streamer, viewer, and the surrounding community.

Twitch’s Bits allow viewers to “cheer” during a live stream.

These features work uniquely well for Twitch, given its gaming-centric user base, the viewer’s strong emotional motivation for supporting streamers, and the product experience is deeply rooted in live streaming.

But we also see these status-building features work well outside Twitch, including YouTube channels that use Patreon. A common benefit of becoming a patron for YouTube channels is some form of public recognition, like being added to a wall of thanks (e.g., CGP Grey, Smarter Every Day) or even a custom badge (e.g., Kurzgesagt).

Patreon membership tiers for Kurzgesagt, CGP Grey, and Smarter Every Day.

Some channels will also create high-priced subscription tiers with more extreme forms of public recognition, like a shoutout during a video.1 These tiers are often limited to a small number of subscribers to create even more exclusivity and prestige.

Ultra-exclusive membership tiers for SciShow, Extra Credits, and Nerd³.

If folks buy your product for more emotional reasons, allowing customers to earn status may be an effective way to keep folks around longer. How can you transform the examples above to drive better retention (or higher revenue) for your product?

Inside jokes

We’ve covered how writers, podcasters, and video creators are deepening their relationship with their audience, but also how they’re bringing the audience together. We’re seeing more and more vibrant communities on Slack and Discord; in-person and virtual events bringing strangers together to form new friendships; and membership-based businesses that provide access to experts and cultivate high-value connections.

These relationship-strengthening features have become well-worn benefits and a key driver of superior retention (and, again, a higher willingness to pay). Let’s dig further and cover a slightly less-obvious and more abstract community-strengthening feature: inside jokes. With the rise of niche media, inside jokes are becoming more prominent and a defining characteristic for many 21st-century businesses (especially in media).

In a recent podcast with the golf media outlet No Laying Up (“NLU”), co-founder Neil Schuster says, “the whole thing is one big inside joke”. He references the nicknames they’ve given to professional golfers, the recurring bits they have, and the characters and storylines they cultivate. The interviewer, Dom Cooke, summarizes well:

It's like all of this stuff, these inside jokes, as a listener, it just cultivates more loyalty.

They also cover the risk of inside jokes — it can make it harder to welcome new folks. Neil points out that long-time listeners don’t want the same points regurgitated repeatedly, but new listeners can have a hard time picking up on all the nuances. Here’s Neil:

A lot of people say things like, I can't keep up with your inside jokes. And some of it to me is like, "Well, listen, I'm not going to do the work for you…”
You can find the answers. You're going to have to work a little bit for it. And I think that the audience that I want to have, it's almost like an investment they're making, which I think long term is more sustainable.

I’m also a big fan of the jam band Phish, which is notorious for using inside jokes, pranks, and other ways to connect with their most hardcore fans. It’s baked into their music — the audience screaming “Hood” in Harry Hood, or the seemingly-random audience clapping during Stash. There’s also the ritual of doing a complete set devoted to covers for Halloween shows or an exuberant gag during New Year’s Eve shows.

Similar to NLU, some of the “inside-baseball” stuff can be a bit mystifying to new fans:

Luckily, there’s no shortage of resources for folks new to Phish, including several online forums, a 3rd-edition encyclopedia, and even a college-level philosophy course. All these elements of fandom provide rich texture and depth to what’s happening on the surface, providing fans with endless rabbit holes to dive down and infinite topics for the audience to discuss and come together around.

The tricky part is that it’s hard to manufacture these elements of fandom — inside jokes, bits, characters, and subtle storylines usually emerge organically in unpredictable ways. But if you see hints of fandom, cultivating it can be a meaningful way to differentiate yourself, boost retention, and increase your customer’s willingness to pay.2

Summary

In some situations, enabling customers to earn status and supporting community-strengthening features can drive meaningful improvements to retention (among other benefits). Think about the brands or products you feel the most affinity toward — what signs of appreciation would you most covet? What symbols or badges would you feel most excited to showcase? What community features would you most like to participate in?

With that in mind, how could you transform those ideas for your product? A more direct path could be asking some of your passionate and loyal fans these questions.

We’ve tip-toed into more abstract territory, but hopefully, some of the examples above spark ideas for your product. As always, I would love to hear your thoughts in the comments.

Thanks for reading,
Reid

Since a shoutout is more of a one-time thing, it may be more effective at driving upgrades than improving retention. But still, I’d imagine the folks that buy these types of memberships aren’t the type to quickly cancel.

I’ve spent somewhere on the order of $5,000 on Phish concerts, and I have friends that are at least an order of magnitude higher.