December 3, 2020

When to Leverage Blockchain & Cryptocurrencies to Drive Experience Growth

Today, product managers across all industry sectors are looking to harness the power of blockchain to create real value for both their teams and customers. Blockchain, which underpins Bitcoin and most cryptocurrencies, is being used to govern and record human or machine interactions such as sending money from one person to another, or recording the votes for an upcoming election by mail ballot.  

Given its high degree of security and transparency, this technology will prove to be a key investment area for businesses as we move into a post-pandemic world. This new bitcoin era, however, has left many leaders both confused and excited, and has created widespread disagreement over which qualities are essential in order to call something a blockchain. 

What are cryptocurrencies like Bitcoin and Litecoin? What is the difference between the cryptocurrencies and blockchain networks that businesses are developing that we read about in the news? And as a product manager, how do you know when there is an opportunity to leverage these technologies to drive growth within your customer or employee experience? These are three important questions asked at Bottle Rocket, so we decided to provide our current best answers below.

The Blockchain & Cryptocurrency Puzzle Breakdown

Before thinking about ways to incorporate blockchain and cryptocurrencies into the customer or employee experience, businesses need to understand the puzzle that is blockchain and cryptocurrencies, and how they are supposed to fit together.

The main difference between Bitcoin and business blockchain is the degree to which the network is decentralized (how much human interaction exists within the network), and the types of transactions being recorded. Bitcoin is a fully decentralized network, which means there is no human interaction when sending Bitcoin from one person to another. Most business blockchains are not fully decentralized and require some human interaction to complete the transaction, such as the manual review of a voting ballot before being confirmed to the ledger.

“Blockchain can mean different things to different types of companies. For big companies, it is about making existing markets more efficient & transparent. For small & medium sized companies, collaboration enables them to punch above their weight and launch exciting new last mile like products and services. But, it is at the start up level that digital innovation burns the brightest, creating a new digital economy to transform whole industries on top of this new quality and ownership, or access of data.” — Andy Martin, Blockchain Business Value Design World Wide Leader — IBM

The Relationship Between Blockchain, Cryptocurrencies & Your Customer or Employee Experience

Their utility as an alternative payment option is often better understood and can already be found embedded in most customer experiences. It’s more a question of whether it makes good business sense to offer Bitcoin or some other cryptocurrency as a payment option. Consumers typically prefer choice and any customer who uses this channel could result in the avoidance of credit card transaction fees by the business, driving higher profit margins.

Turning to the other side of the same coin, the relationship isn’t as intuitively obvious. Most of this stems from the fact that these are business focused networks that don’t get much visibility by the public. The experience in this instance is typically a web or mobile app used by your employees. This employee experience is a window into the blockchain and its available functions. The quality and ease-of-use of this employee experience will be the main driver of adoption.

The relationship between the customers/employees and blockchain/cryptocurrencies, however, will be largely derived by the design and the user experience of the web and/or mobile application used to interact with it. If businesses want to drive adoption using blockchain and cryptocurrencies, they must make the experience so easy-to-use, that it is intuitively understood by even the most casual observer. 

In order to do this, leaders will need to cultivate a strong understanding of their customer base, their current behaviors, expectations, goals, and assumptions. Indeed, bad design, navigation, and user experience are the main barriers that have prevented adoption growth of Bitcoin and other cryptocurrencies. It simply isn’t easy to use for most people and thus does not get used as much as it could be.

When to Leverage Blockchain and Cryptocurrencies to Drive Experience Growth

Whether or not it makes sense to invest in blockchain and/or cryptocurrencies to drive growth, depends largely on the benefits that would be gained from automated decision and governance processes and the level of interest from your future customer/employee base. Below are three common areas to consider when evaluating your customer or employee experience for opportunities to drive growth through blockchain and cryptocurrencies.

  1. Cross B2B silo collaboration (reconciliation, provenance or a visibility issue) (Source — Andy Martin, IBM)
  2. Data that needs to be shared is too valuable to let a 3rd party govern on your behalf (Source — Andy Martin, IBM)
  3. Customer interest supports additional payment options

As a product manager, it is important to consistently take the pulse of the businesses decision and governance model taking place inside your business right now. An easy way to do this is to simply write down every decision made internally and externally with third parties. Once this list has been made, evaluate each decision using a multidimensional lens that includes the amount of time to complete each decision and the amount of friction it causes (none, low, medium, high). 

Once this is complete, filter the list so that the decisions with the highest level of friction and that take the most time to complete on average are on top and proceed in descending order down the list. These are the areas that represent your best opportunities to drive growth through blockchain and cryptocurrencies. For the highest-ranked items, do a cost-benefit analysist to see if a blockchain solution could help expedite these processes internally. This will then help you build out your strategy, create your service blueprint, and get you to launch in real time. Like everything else, you’ll want to continuously monitor, evolve, and grow.

In Summary 

Product managers and product growth SMEs should keep a consistent pulse on their governance models and perform regular reviews to determine when it makes sense to leverage this technology.

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October 12, 2020

The Second Law of Customer Retention

Retention is not a Single Moment in Time, but Rather a Series of States Determined by Actions in the Customer Retention Lifecycle

In The First Law of Customer Retention (previously published here), we talked about how retention is a cornerstone to sustainable growth and a key driver of new organic customer growth within a business. We defined it as the volume of customers as a percentage of the total base who come back to an experience over time and continue to exert the effort and/or pay the cost to reach the value available in said experience.

Further, we provided an equation to determine whether or not a potential customer moving through a business’s customer experience will be retained based upon the ratio of value to cost and effort. This equation and the retention k-factor that it produces is powerful if used correctly, but is only a piece of a much larger retention puzzle.

This larger puzzle shows us that customer retention is not a single moment in time. Rather, it’s a series of states that are constantly changing based upon the actions people are taking in response to content and features they experience from a business.

These states are determined and governed by key action gateways that potential customers must go through to become a loyal customer who comes back time and time again.

The Customer Retention Lifecycle

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The Customer Retention Lifecycle

All potential customers will enter the customer retention lifecycle by becoming “aware” of a business through some piece of advertising or marketing content, or by word-of-mouth.

The first retention gateway that a potential customer goes through is the “identity” gateway, and potential customers make it through this gateway by creating an account or some other action where they give a business a way to identify who they are through an email or phone number for example.

It should be noted that businesses that do not require an account to be created or do not collect any personally identifiable information (aka — P.I.I.) are not able to effectively measure retention and thus this framework would not be 100% applicable. Further, many businesses, such as an e-commerce website for example, offer people the ability to checkout as a guest. While you don’t explicitly create an account, these brands often collect a personal identifier during the checkout process and append it to the purchase record and thus are able to measure retention states. You simply cannot measure customer retention without knowing who a person is in the context of your business.

After a potential customer establishes their identity with a business, they have two choices:

  1. Continue performing actions with the business
  2. Stop performing actions with the business

Below is a flow diagram showing the possible paths potential customers can take based upon these two different choices:

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The Customer Retention Lifecycle

Measuring Your Retention Pulse

In order to measure this lifecycle in your business and make it actionable, we need to view this retention lifecycle window over time and then draw conclusions from the trends. An example of how this can be visualized is shown below.

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The Customer Retention Lifecycle Over Time (Source — William Zhang, Amplitude)

From this visualization, we are able to see the flow of people between different retention states within a business’s customer experience. We can use this to measure the retention pulse of an experience which tells us the trajectory of retention at any given point in time (Source — William Zhang, Amplitude).

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The Customer Retention Pulse

If the Customer Retention Pulse (CRP) is less than one, that means the business is losing retained customers faster than adding new or resurrected ones and thus are in a state of retention decline for that given time period. Conversely, if this CRP is greater than one, that means the business is adding more retained customers than it is losing and thus are in a state of retention growth for that given time period.

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The Customer Retention Pulse Over Time

Shifting from Decline to Growth

If a business wants to shift from a state of decline to a state of growth, they need to add more value and/or decrease the effort and/or cost associated with reaching that value, as detailed in The First Law of Customer Retention here.

Insuring that potential and existing customers are always seeing more value than the effort and cost associated with acquiring that value, will give a business the best chance of keeping their CRP above one. Businesses that always maintain a CRP above one will always have a greater in-flow of new and resurrected customers than the out-flow of dormant users, insuring sustainable retention growth.

In summary, retention is not a single moment in time, but rather a series of states that are constantly changing based upon the actions people are taking in response to content and features they experience throughout their time with a business. These states are determined and governed by key action gateways and measured over time can be used to calculate the customer retention pulse of business to highlight if it is in a state of retention decline or growth for a given time period.

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