In the current economic scenario, businesses are seeking out new and innovative ways of increasing growth.
But are they doing enough to retain their existing users?
It’s an important question. Because no amount of growth marketing hacks will help companies plug a leaky bucket of churning users.
Every success story of a high-growth company involves a relentless focus on customer retention. Retention is not considered as an afterthought, but rather, is something that is planned right from the start.
“User retention refers to the ability of a company or product to retain its users over a specified period,” explains Sunil Thomas, co-founder, and CEO at retention marketing platform CleverTap.
“High retention means customers of the business tend to return to, continue to buy, or in some other way not deflect to another product or business, or to non-use entirely,” he adds.
A 5 per cent improvement in customer retention rates can drive an increase in profits of between 25 to 95 per cent, according to a study by Bain and Company.
“Without focusing on retention, brands are trying to fill a leaky bucket and focusing on acquiring more users who don’t stick around for long,” says Almitra Karnik, head of marketing at CleverTap. “This impacts the top line as well as customer lifetime value for these brands.”
Retention has long been a major problem across the globe for companies, who tend to rely on discounts as an initial incentive but later have to resort to normal pricing to boost profits.
“As long as there has been the ability to acquire customers relatively cheaply, many brands have not bothered to tackle the tougher question of how to keep customers happy,” the Bain report states.
“The consumer will stay loyal, but only when the supplier provides an integrated platform of offerings and a service that reflects the projected brand image.”
Anand Jain, co-founder of Clevertap agrees that the focus is shifting from acquiring customers by deep discounting to meaningful engagement to drive retention.
“There’s intense competition for user attention by brands, while the user’s attention span is reducing,” he says.
One way to address the issue is to use data-led initiatives. “Intensive” users of customer analytics are nine times more likely to outperform their competitors in terms of customer loyalty, found a report by McKinsey.
“By directly incorporating data science-driven recommendations into marketing campaigns, our customers are able to personalise their consumers’ interactions. This eventually results in improved revenue and brand loyalty,” explains Jain.
To understand more on customer retention and using data to unlock favourable strategies, CleverTap has created a webinar addressing the following topics –
– User retention metrics to focus on
– The pillars of sustainable growth and retention
– How leading businesses are successfully driving growth with user retention
– The current state of mobile apps
– Understanding the leaky bucket problem
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You can also find out more information here