by Anne Mai Bertelsen, MAi Strategies-

Last week, David Martin, of Nielsen Online, posted data showing that despite Twitter’s meteoric rise, the micro-blogging site is failing to retain 60% or more of its users on a monthly basis.  Martin also noted that Twitter’s defection rate is greater than its social networking peers Facebook and MySpace.

The problem may stem from Twitter’s non-intuitive interface and user experience which expects new enrollees to figure out Twitter on their own.

Lessons From Loyalty Marketers

Twitter’s defection numbers are no surprise to brand managers or marketers in established businesses, particularly subscription based businesses — e.g., print media,  telecom, wireless, cable, internet service providers, insurance,  financial services.  They have all struggled with customer churn as they attempt to move customers from consideration to enthusiastic brand advocate.

Customer Life Cycle

Along the way, they have learned some important lessons:

• It costs more to acquire a customer then to retain a customer.
• Customers of free services have higher attrition rates than those who pay a fee.
• Holding on to 1% of customers has the equivalent value of reducing costs by 10%.
• Customers who defect become brand detractors, advising others not to use the product or service.

As a result, these businesses have implemented customer loyalty strategies to foster brand advocacy, increase likelihood of repeat or upgrade sales, stave off competitive threats and improve overall profitability.

So What Can Twitter Do?

• Welcome new users beyond the cursory “welcome” email: In the data provided by Nielsen, MySpace has significantly higher retention rates than Twitter or Facebook.  Interestingly, it is the only one that has a welcome strategy, in the guise of official “first friend” Tom who not only welcomes new users but also helps them learn about MySpace’s features.  Tom provides guidance and “friendship” to all new enrollees and is helpful answering their questions about how MySpace works. (With his departure from the company, it remains to be seen if this official “first friend” will continue).   Implementing a welcome strategy that provides guidance on how to use Twitter, how to find friends, and how to decode the commands and shortcuts (What is a retweet? DM? Hashtag?) could go a long way in easing new users into the Twitter community and helping them find Twitter’s value.

• Engage New Users: Engaging in Twitter requires both followers and a following.  When a new user signs up for Twitter, their Twitter stream is empty.  Beyond having an initial tweet “welcoming” a new user in their Tweetstream, Twitter should also help new users find relevant people to follow as well as introduce existing Twitter members to the new member.  It’s like going to a party where everyone seems to be having a great, loud time but the new guest doesn’t know anyone at the party.  The hostess needs to come over and introduce the new guest to other guests who have something in common — even if it’s just that they live in the same town.  While Twitter does make suggestions for people to follow, the recommendations, unfortunately, are not based on any insights about the new user.  Instead, Twitter offers up celebrities and near celebrities — who often don’t follow people back or engage in conversations that would include the new user.

• Check in on new users after a few weeks:  Even when a warm welcome and engagement tactics are deployed, some users will still languish.  A follow-up checkin — particularly on users who have not logged in or tweeted — can help identify concerns, issues, barriers that have prevented users from engaging in the micro-site.  This outreach, which can be done through email, or direct message, can re-start the conversation and hopefully engage the user to begin using Twitter.

• Institute a likely defector strategy:  Leveraging its data, Twitter could identify users who have not utilized the service in 30 days or more and begin reaching out to them to win them back.   There is some data to suggest that there is a long initial adoption curve to Twitter.  When people first join, like Damon Cortesi, the developer of TweetStat, they often found Twitterville lonely with no friends on the microsite to follow.  They signed up out of curiousity, show nothing of value and went away.  If friends and colleagues start joining, they may return — which was Cortesi’s experience and one he suspects others have experienced in Twitterville.   A random query among a subset of roughly 20,000 TweetStat users uncovered some interesting trends.   Even among these Twitter converts, 39% had an average lapse of 35.4 days between their first and second tweet update.  Cortesi’s data does not include Twitter users who have never come back.

While not a comprehensive customer loyalty strategy, these initial steps can help reduce Twitter’s defection rate — as those who have implemented loyalty strategies can attest to.

Of course, Twitter could follow a different model:  AOL had heady growth, amassing 35 million subscribers.  But, the growth masked an underlying problem:  poor customer experience was driving subscribers away.  While AOL was gaining hundreds of thousands of subscribers every month, in 2003, it was also losing 200,000 subscribers each month.

Anne Mai Bertelsen is the Founder and President of MAi Strategies, a marketing consulting firm specializing in integrated marketing strategy development and implementation.