Without retention, you are dead.

Katherine Barchetti, the dazzling marketer who outsold every competition in her heyday said; “make a customer, not a sale.”

Many startups, excited and naive, are taken with the idea that acquisition is all that matters. They naturally spend clumps of money to acquire new sign-ups and new downloads, ignoring the customers they already have.

You want to know the cold hard truth?

Acquisition is a rock’s dream if your startup is losing customers faster than a pit bull that ran into a porcupine.

A startup losing customer at such a high rate could stay in business for a while, but it’s only a matter of time before it keels over – a tired scraggly startup. Dead!

Because dying hasn’t helped anyone – aside from the competition, let’s have a gander at a few tips that can help you stay alive by keeping your customers.

Before we start, a few stats to let this customer retention kool aid go down easier:

Did you know that a 5% increase in customer retention can increase your company’s profitability by up to 95%? Well, according to Bain and Co, that’s exactly the truth.

It costs your company more to attract a new customer than it takes to keep an existing one. That is pretty obvious, but it’s nice to see a respected organization put its weight behind this. Lee Resources Inc found that you will spend five times more money to attract a new customer, compared to keeping the one you got.

So it’s rather wasteful that companies gravitate towards adding more customers, than keeping their existing customers happy and engaged.

How do you keep those customers whose retention your business life depends on?

1. Begin with the customer in mind

Customers don’t owe you their loyalty, you need to earn it … every day. So, while it’s true that your product is “what the world needs” and should, therefore, retain naturally, some customers can have other ideas.

According to that Bain and Co study, while 80% of companies believed they offer cool customer care service, only 8% of their customers share the same sentiment.

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Therefore, every assumption is dangerous and to start things off, you need to understand how customers are engaging with your core offering.Not knowing the customer is a recipe for disaster. So, you need to ask a few questions of your customer data.

2. Find out what your current retention is

How many people are staying with your core offering after the first sale? Using your mobile app as an example: how many people stayed with your app after Day 0?

The easiest way to measure this is using acquisition cohorts, or day n retention. With this, you can categorize your users by the day, or predefined period they downloaded your app and find out how many are still using your service N days later.

This tells you the period when users drop off after initial contact with your app. The highest attrition is usually witnessed on the first day, but it may be different for your app. Using this method will help you know what days people drop off and craft a solution for that phase of the problem.

As an example, if most of your users drop off on day three, you may want to send an email to them on that day reminding them of how many people have checked their profile.

3: What are people doing with your app/product?

Figure out what people love about your product. What keeps them engaged?

Retention does not equal engagement.

It could simply mean a user comes to use your app once in two weeks because you sent a reminder that tells them they still have the app on their phone. They’ll probably forget about it for another week or so. There is no real interaction.

Engagement is stickiness. It is how many times a user performs an action over a period of time because they have a motive.

Although those users who open your app once in a week will be in the retention bucket for the time period measured, but they were not really using the app. And they will ultimately churn.

To keep them, you need to understand why those who stay on your app do so. What keeps them engaged? And make sure to keep those features optimized and drive attention to them.

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4: What is the pattern-of-use on your product that leads to retention?

Past behavior is the best predictor of future behavior. There are activities that people do in their first few days of using your app or product that hints at their length of stay with the app.

While acquisition cohorts tell you when people are leaving, another analysis, behavioral cohorts lets you know why people are leaving – or staying.

Using the behavioral cohorts analysis, you will isolate behaviors of individual users and see how they affect retention.

For instance, in a particular app, people who followed a certain account on Day 0 and left comment on a forum have 60% better retention that those who didn’t.

This means people who follow one certain account and leave comments on forums are likely to be better retained. Armed with an information like this you will make sure your onboarding flow puts those options right in front of the user. A la, “follow these accounts to finish your sign up”, or “leave your first comment on X forum to test your keypad.”

You could also find out what makes people hang around this popular decision-switch account or a forum, then use that information in other places.

For product-driven businesses, like a fruit on demand business which may not involve app downloads, this level of tracking is also possible.

Web analytics for your website might give some insight, but often times, old-fashion survey becomes the best way to gather data on consumer engagement.

Do customers come back after the first purchase? Why do they do so? What do they like most about your service? are there features they think are missing in your product? What did they think about their last purchase? How do they feel about it?

Analyzing the responses will reveal the best ways to fix leakages in retention, and will make sure you are focused on the right leakage per time.  And that you are using the right tool too.

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Example: if you find most of your customers leave after speaking with your customer service agents, that says you might want to look into your CCRs. Maybe they are nasty. Have bad breath (you don’t say). The data helped you narrow down your adjustments to that part of your business.

5. Start fixing the holes with an effective customer retention strategy

The numbers are only the start of a long process. When these leakages have been identified, it’s good sense to plug them. That way, you can make sure things are going the right way.

One effective way to plug the retention hole is simply to address the problem. What are people complaining about? Why are they leaving? Get down to fixing them.

You can also socialize with your customers. Your most engaged users on social media can be your doom or boon. If they are loving you, they will talk about you and share your gospel, but if they don’t, you’ll get a less-than-kind publicity. So, you want to keep them happy.

Other retention strategies include offering coupons and special offers and rigging up loyalty programs.

Another way is by enabling your users to share success stories. User cases are worth a thousand words. Share stories of how people are successfully using your app. Or how much value some people have claimed to derive from your product. This will reaffirm your product and show how your features make sense to other users.

For more resources on how to fix your customer retention check out:

SaaS Marketing: 21 Growth Hacks to Test Today

How to Quickly Convert Trial Users Into Paying Customers 

81+ Resources on Validation, Growth, Customer Retention, and Scaling a Startup


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