Startup Customer Retention

In any startup customer retention is vital. Initially, startups focus on selling their ideas and acquiring customers. Once business gains traction in the market the entrepreneur has to ensure he gets repeat customers and for this he has to have a clear strategy on customer retention.  For businesses to grow it is essential  to retain existing customers  while acquiring new ones.

Customer retention statistics are typically expressed as a percentage of  long term clients, and they are important to a business since satisfied retained customers tend to spend more, cost less and make valuable references to new potential customers.- Business Dictionary.

Image Source; Stuart Miles

 Startup Customer Retention - Dilemma

Startups may not have deep pockets to advertise, use big names to build brand. They can learn from existing strategies and winning customer loyalty with a lean budget is always possible.  

 Startup Customer Retention- Advantages

Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers.

Customer retention is more than giving the customer what they expect, it’s about exceeding their expectations so that they become brand ambassadors for the product/company. The key differentiation in a competitive environment is often the delivery of a consistently high standard of customer service. Customer delight is the mantra.

  • Increased rev­enue
  • Lower cus­tomer acqui­si­tion costs
  • Increased refer­rals

Startup Customer Retention- Loyalty Programs

Customer Retention- Loyalty Programs

The customer loyalty programs offer a competitive advantage in a highly crowded and difficult to offer differentiation in product or service.

Proven Ways to Increase Cus­tomer Loyalty

  1. Be proac­tive! Research your com­peti­tors to com­pare pric­ing and mar­ket­ing strategy.
  2. Talk to your employ­ees. Your front line rep­re­sen­ta­tives will have great insights into cus­tomer needs and wants.
  3. Talk to your cus­tomers. No one knows bet­ter than your cus­tomers. Sur­vey new cus­tomers and repeat cus­tomers to con­firm that your processes are effective.
  4. Mon­i­tor social media sites. Google your busi­ness name and see what comes up.
  5. Reward repeat customers

1.       Regular Communication with Customized Content and Special Offers

Shoppers stop calls their loyalty program as First Citizen and gives an opportunity for buying new introductions. You can invite loyal customers for a get together to share their experiences.

In the current context, Social Media is a powerful tool which can have a positive impact or can have a disastrous consequence.

2.      Customer service

 Poor customer service accounts for 70% of customer loss

A restaurant recognizing the customer name or their preferred seat in the restaurant has always created customer loyalty.

Customer service is critical in service industry especially where customers can have their own idea of what good service is.

3.       Co Creating the Product with loyal Customers

Launching a new product or service is always risky and this can be minimized by involving customers right from the ideation stage.

TVS Motors used it effectively when they launched their Scooty. The new product launch was a roaring success.

4.      Bring Your Customers Together Social Media platforms like Face Book, LinkedIn  etc.can be leveraged to create closed  customer groups .

Amazon always publishes book review from customers who have purchased books from their online stores

5.      Loyalty Programs


Airline Industry

Loyalty programs are applicable to any type of business. Airlines offer reward points every time a customer flies. Customers can accumulate these points and redeem them.

There are three types of membership. (Silver, Gold and Platinum). The customer is issued a card indicating the type of membership.

Platinum members get the highest benefit like lounge access at Airport, Priority Check-in and also priority luggage retrieval.

The validity is for a year and to retain different categories a customer must login certain number of air miles every year.

Coffee Day

Coffee Day offers points every time a customer buys coffee powder from their outlets. The accumulated points can be exchanged for a product depending on the number of points. The points accumulated under loyalty program has no time limit and can be redeemed depending on the customer’s requirement for a particular product.

Emirates Airlines

Emirates offers its business class passengers a drop by Mercedes Benz at their arrival destinations.

6.      Other Approaches

1-800 telephone services or FAQ’s, E-Mail News Letters, periodic servicing etc will improve customer retention.

Startup Customer Retention- Books

Customer Retention: The New Acquisition -by Alexandrea Breski

(Book from Amazon)


A 5% increase in customer retention can increase business profits by 25%-125% and repeat customers spend more than new customers. It’s easier, cheaper, more effective and makes you more money to retain customers. So why spend all of your money and focus all of your time trying to acquire new customers?

According to Bain and Company it cost 6-7 times more to gain a new customer than retain an existing one. Why would you only ask how to get customers? That is not the question that is going to benefit you. Is customer acquisition important? Yes! Is it the most important? Not according to the facts. The probability of selling to an existing customer is 60 -70%. The probability of selling to a new prospect is 5-20%.”

Startup Customer Retention- Conclusion

Bringing in new customers is hard, but losing them is easy (and costly). That’s why customer retention is critical. – Len Markidan  

Customer retention is a key for success of any business. Startups have to devise their own strategies based on their financial resources