Customer-Keepers 101: Early-Stage Startup Edition
In this narrative, Abhinay unravels the secrets that turn transactions into thriving relationships, providing insights and strategies to empower startups in retaining a loyal customer base.
Launching a startup is like planting a seed, and while growth is exciting, the real challenge lies in cultivating customer relationships that stand the test of time. In this article, we shine a spotlight on the often overlooked but crucial aspect of business expansion for early-stage startups: Customer Retention.
Note: This article is inspired by the partnered session with Clevertap, hosted by Razorpay Rize.
Abhinay Jain brings over 11 years of expertise in learning, P&L management, and product innovation. Currently leading the growth of CleverTap for Startups, Abhinay is dedicated to fostering self-serve products. His mission extends to assisting early-stage startups worldwide in the art of customer retention and engagement, providing valuable insights and strategies to fortify their customer base.
That brings us to the most important question-
How do you grow your Business- The Equation?
From building a captivating customer presence to fostering customer love and exploring innovative horizons, business growth can play out quite differently for each and every startup. But, if we were to sum up our growth journey in just one equation, it boils down to:
Revenue= No. of Customers* Frequency of Purchase* Average Order Value
Or
Attention span= No of Users* Frequency of Usage* Average Time Spent
Where, no of customers can be New customers or Repeated Customers.
All the efforts to grow a business revolve around attracting new customers and keeping the ones you have. It's like a balance between reaching out to fresh faces and making sure your existing customers stick around.
Acquisition vs Retention
Acquisition and Retention are essentially two sides of the same business coin, each playing a crucial role in the overall success and sustainability of a company. While customer acquisition focuses on expanding the customer base and bringing in new faces, retention is the art of cultivating lasting relationships with those acquired.
And, to underline the significance of Retention, Clevertap has just dropped some mind-blowing Customer Retention stats;
Here's the scoop:
Acquiring a Customer is 5x as expensive as retaining an existing customer
Returning visitors are 74% more likely to convert than the new ones
Increasing Customer Retention rates by 5% increases Profits by 25-95%
Repeat Customers are 50% more likely to try new products
Repeat Customers spend 31% more than the new ones
So, if Acquisition is the Investment, Retention is the rewarding Return On Investment that unfolds in the extended business journey.
Why is Retention a challenge for Early-stage Startups?
As an early-stage startup, acquiring new customers is undoubtedly a challenging feat in itself. However, the true mammoth task lies in retaining these customers, especially when confronted with tonnes of challenges. Some of these are-
Dynamic Team & Scale: The early-stage environment is a constant flux of evolution, with teams and scale adapting to the startup's growth trajectory.
Absence of Dedicated Retention Team: Unlike established counterparts, early-stage startups may lack a dedicated team specifically focused on retention marketing or customer retention strategies.
Product-Centric Focus: Early on, the spotlight often shines on product development and quick launches, sometimes overshadowing the importance of honing in on personalized user data.
LTV Measurement Complexity: The intricate task of measuring the Lifetime Value of the Customer (LTV) poses a challenge, especially when compared to the more straightforward metric of Customer Acquisition Cost (CAC).
Retention Strategy- In 3 Simple Steps
1. Create a Strategy
Define Use Cases:
Tailor your approach based on use cases, whether it's activation or subscription, aligning with your business model.
Set Smart KPIs:
Establish Key Performance Indicators (KPIs) with achievable benchmarks, providing a clear roadmap for success.
Detailed Event Sheet:
Create a comprehensive sheet capturing crucial events.
Note: A structured Business Requirements Development (BRD) and Product Requirements Development (PRD) ensure events are well-defined.
Analytics-Driven Insights:
Leverage analytics through an integrated dashboard to gain insights into fundamental metrics, guiding informed decision-making.
Moving to the Next Level-
2. Work with a Return on Time Investment
Cover Engagement Lifecycle
Ensure that your entire engagement lifecycle (from Product Development to GTM) gets covered, reaching your audience through diverse and relevant channels.
Avoid Over- Optimization
Concentrate efforts on optimizing features and impactful user journeys without optimization.
3. Spirit of Experimentation
Revamp Brand Communication:
Experiment with your brand communication, whether it's tweaking copy or design, injecting an engaging spirit into your brand.
Enhance Personalization:
Move beyond first names in personalization, diving into deeper, more meaningful customization for a personalized user experience.
Explore Trends and Preferences:
Embrace experimentation by exploring different trends, channels, and user preferences.
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