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Amol Ghemud Published: August 14, 2018
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80% of a business’ future revenue comes from just 20% of existing customers.
Bhaskar Thakur, Co-Founder of upGrowthrecently conducted a workshop on “How to Growth Hack Customer Retention”.
About the Workshop
The workshop was all about learning the best growth hacks to retain customers for your business using digital marketing and technology.
The workshop covered how to design out-of-the-box growth strategies which works only when you can show measurable changes through web and mobile analytics.
It basically defines the “what” when it comes to your startup business before discussing the “how” of automation and scaling up.
Why Growth Hacking is important for your startup?
The growth hacking mentality pushes results over process in a data-driven environment. Everything comes down to what works.
Applying Growth Hacking will place you in an exclusive club – and you’ll gain so much more than your competitors. Because lot of people struggle to figure out how to grow their business.
But doing this in the right manner is important…otherwise it can backfire at your business BIG TIME.
Customer retention in “A2R2” framework
A2R2 framework for growth provides the perfect toolkit to engineer growth around the customer lifecycle. It gives powerful techniques to gain massive amount of attention, followers, and customers for your business.
AttractGet visible to the right target audience, for new products these are early adopters who are constantly looking for better ways of solving a problem.ActivateGet the users understand the core benefit of your product as soon as possible- – the Aha! Moment and get them to sign up.RetainKeep them coming back. We optimize new user engagement to keep them coming back & engaging.ReapNurture brand champions. We build and run virality loops & viral campaigns to engage evangelists & large communities.
In order to achieve long-term sustainable growth, growth teams focus on delivering delightful and personalised experiences at scale.
Why you should care about Customer Retention?
It costs 7 times more to ACQUIRE one new customer than it does to RETAIN one.
More than anything, the fact that marketers are acknowledging the need for growth in customer retention is a sign of the changing times – and the rising importance of customer retention.
Calculate the Customer’s Retention Rate and Churn Rate
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Why do customers drop off out of your product or services?
Businesses mostly focus on attracting new customers and often forget about existing customers who have been staying with them for a long time.
In any business existing customers leave and new customers arrive.
These are possible reasons why customers leave:They are no longer buying in your service/product categoryThey have found better solutionThey turned down by product or service dissatisfactionMoved to a competitor
Customer retention strategies
Retaining customers is the ultimate goal for any business. Whether online or offline, ensuring that customers are satisfied is critical for long-term success.
With a strong customer retention strategy, it’s much easier to grow your revenue and profitability.
Engaging with existing customers, using content marketing strategies & going extra mile with them are few of the strategies useful to retain your customers.
Continue refining and improving your customer retention strategy and execution — it may deliver the highest marketing ROI of all your marketing programs.
1. Use CRM
With the total cost of acquiring new customers many times higher than servicing existing clients it’s no surprise that retaining business is at the heart of many organisations CRM strategy.
CRM systems have numerous service functions and they can be used to help you keep your best customers and protect future revenues.
2. Focus on product/service.
Companies that shift their focus to customer retention often use the the approach of focusing on their product and service.
3. Engaging with existing customers by giving them special offers.
Another way to achieve customer retention is by engaging with them by giving them special offers and making them feel special. This will make them want to use your service/product again and again.
The A2R2 framework offers a holistic roadmap for sustainable growth by shifting focus from mere acquisition to long-term customer value. It maps directly to the customer journey, ensuring you are not just attracting users but are actively creating brand champions. This is vital because it costs 7 times more to acquire a new customer than to retain an existing one, making retention the key to profitability.
The framework is structured across four key stages:
Attract: This initial stage is about getting visible to the right early adopters who are actively seeking a solution to their problem.
Activate: The goal here is to guide users to their “Aha! Moment” as quickly as possible, helping them understand the core benefit of your product and encouraging a sign-up.
Retain: This is where long-term value is built. By optimizing new user engagement and delivering personalized experiences, you keep customers coming back.
Reap: The final stage focuses on nurturing your most engaged customers into evangelists, using virality loops and campaigns to drive organic growth.
By following this model, your growth team moves from short-term wins to building a scalable and defensible business. To see how these principles apply in practice, explore the full workshop details.
This powerful 80/20 statistic provides a clear financial justification for prioritizing customer retention. It demonstrates that your most valuable asset is not your next customer, but a small, loyal segment of your current customer base. By focusing on this group, you can achieve disproportionately high revenue growth and profitability with a smaller investment compared to broad acquisition campaigns.
A company like upGrowth would advise clients to first identify this top 20% of customers using analytics from a CRM or other data platform. Once identified, you can build a strong business case for retention by highlighting these points:
Higher Marketing ROI: Showcasing that it costs 7 times more to acquire a new customer makes the cost-effectiveness of retention undeniable.
Increased Profitability: Loyal customers tend to spend more over time and are less price-sensitive, directly boosting your margins.
Predictable Revenue Streams: A strong retained customer base provides a stable and predictable foundation for future revenue projections.
This evidence-based approach shifts the conversation from vanity metrics like new sign-ups to core business drivers like customer lifetime value and profitability. Discover more strategies for leveraging these metrics in the complete guide.
Customer churn is often a silent killer for startups, as the excitement of new acquisitions can mask the loss of existing users. The primary reasons for churn are rarely sudden; they build over time and can be actively managed. Focusing on why customers leave is the first step to building a resilient business.
Customers typically drop off for a handful of key reasons which you can address proactively:
Found a Better Solution: This suggests a gap in your value proposition. Use customer feedback surveys and competitor analysis to continuously improve your offering.
Product or Service Dissatisfaction: This is a direct signal of a poor user experience. Implement analytics to track user behavior, identify friction points, and optimize the customer journey.
No Longer Need the Service: While some churn is natural, you can mitigate this by exploring new use cases or features that expand your product's utility for long-term users.
By adopting a growth hacking mentality, your team can use data to predict and prevent churn instead of just reacting to it. The full article provides a deeper look into designing these proactive retention systems.
A startup can effectively build a customer retention strategy by focusing on data-driven, high-impact actions rather than expensive, large-scale campaigns. The key is to adopt a growth hacking mentality that prioritizes results over process, starting with a clear, measurable plan. This ensures every effort contributes directly to sustainable growth.
Here is a stepwise plan to get started:
Step 1: Calculate Baseline Metrics: Before you can improve, you must measure. Use the formula provided to calculate your current customer retention and churn rates. This is your benchmark for success.
Step 2: Identify Drop-Off Points: Use web and mobile analytics to understand where and why users are leaving. Is it after the first week? After a specific interaction? Pinpoint the problem areas.
Step 3: Implement a Simple CRM: A Customer Relationship Management (CRM) system is essential. It helps you track interactions, segment your audience, and identify your most valuable customers (the top 20% who drive 80% of revenue).
Step 4: Engage with Content: Start a simple content marketing program. Use emails or blog posts to share useful tips, product updates, and success stories that re-engage users and reinforce your product's value.
By following these steps, you create a feedback loop for continuous improvement. The full workshop summary explains how to scale these efforts as your business grows.
The choice between acquisition and retention is not about picking one over the other, but about finding the right balance for your current growth stage. While acquisition is necessary to build an initial user base, a sole focus on it can create a 'leaky bucket' where new users leave as fast as they arrive. A retention-first mindset ensures that the users you work so hard to acquire actually stick around to provide long-term value.
When evaluating these two approaches, consider these factors:
Profitability: Retention is the engine of profitability. The fact that acquiring a customer is 7 times more expensive means every retained customer directly improves your margins.
Sustainable Growth: Acquisition efforts can yield quick spikes, but retention creates a stable, growing foundation of recurring revenue and brand champions who fuel organic growth.
Product Feedback: Engaged, long-term users provide the most valuable feedback for product improvements, creating a virtuous cycle of customer-centric development.
The most successful companies, like those advised by upGrowth, understand that retention is the foundation upon which all other growth is built. For a deeper analysis of how to balance these priorities, explore the complete guide.
The shift toward customer retention signals a fundamental change in digital marketing, moving from broad, top-of-funnel advertising to deep, data-driven relationship building. In the future, success will not be defined by the volume of new leads but by the value extracted from the entire customer lifecycle. This requires a new set of skills focused on technology, analytics, and empathy.
Marketers should focus on developing capabilities in these key areas:
Data Analytics and Interpretation: The ability to analyze user behavior, predict churn, and identify opportunities for personalization is paramount. This goes beyond reading a dashboard to understanding the 'why' behind the data.
Marketing Automation and CRM Expertise: Tools for delivering personalized experiences at scale are essential. Mastery of these platforms allows you to create complex, individualized customer journeys.
Customer Empathy and Journey Mapping: You need to deeply understand the customer's problems and goals to create truly delightful experiences that foster loyalty.
This evolution means the marketing teams of the future will look more like growth-oriented product teams, constantly iterating based on user feedback and data. To prepare for this shift, start by exploring the analytical methods discussed in the full article.
The growth hacking mentality represents a profound cultural shift from traditional marketing to a more agile, scientific, and results-obsessed approach. It is not about a specific tactic, but a mindset that treats growth as a product of continuous experimentation and data analysis. For a startup, where resources are scarce and survival depends on rapid progress, this mentality is a critical operational advantage.
This approach is defined by several core principles:
Data Over Opinions: Every decision, from a simple headline change to a major feature launch, is based on quantitative data and A/B testing, not on hunches or hierarchy.
Results Over Process: While processes are useful, they should never get in the way of achieving a measurable outcome. The central question is always, “What works?”
Cross-Functional Collaboration: Growth is not just a marketing job. It involves product, engineering, and data teams working together in rapid iteration cycles.
Adopting this mindset, as championed in the workshop by Bhaskar Thakur, forces a discipline of accountability and efficiency. It ensures your team is always focused on activities that create demonstrable and impactful growth. To learn how to instill this culture in your own team, review the strategies in the full summary.
While growth hacking can accelerate success, misapplication can severely damage customer relationships and brand reputation. The most common mistakes stem from prioritizing short-term metrics over long-term customer value, leading to tactics that feel manipulative or intrusive. Avoiding these pitfalls requires a disciplined, customer-centric approach.
Key mistakes to avoid include:
Over-Automating Communication: Sending generic, impersonal, or excessively frequent automated messages can make customers feel like a number, leading them to tune out or churn.
Creating Dark Patterns: Using deceptive UI/UX designs to trick users into staying subscribed or making a purchase is a guaranteed way to destroy trust and generate negative word-of-mouth.
Ignoring Qualitative Feedback: Relying solely on quantitative data without understanding the human context behind it can lead to optimizing for the wrong things and alienating your user base.
A successful growth strategy must be built on a foundation of delivering genuine value. Always test your retention tactics against the question: “Does this genuinely help my customer and make their experience better?” Explore the full guide for more on ethical and effective growth strategies.
The emphasis on measurable changes is the core principle that elevates growth hacking from a collection of clever tricks to a systematic business science. Experts like Bhaskar Thakur advocate for this approach because it creates accountability and clarity, ensuring that every marketing action is a deliberate experiment designed to achieve a specific, quantifiable outcome. This is how you build a reliable engine for growth, not just a series of one-off wins.
This data-centric methodology proves its value in several ways:
It Removes Guesswork: Instead of debating which idea is best, you test hypotheses and let the data decide. This data-driven approach leads to better, faster decisions.
It Demonstrates ROI: By tying retention activities (like a new onboarding flow) to metrics (like 30-day retention rate), you can clearly demonstrate the financial impact of your work.
It Fosters a Culture of Improvement: When the team is focused on moving a metric, it creates a shared goal and encourages continuous iteration and learning.
The ultimate goal is to create a tight feedback loop where you ideate, implement, measure, and learn. This scientific method is what separates high-growth companies from the rest. Dive deeper into the analytics techniques in the full workshop overview.
For a B2C startup, combining value-added content with exceptional service creates a deeply positive customer experience that fosters loyalty. This two-pronged approach addresses both the rational and emotional needs of a customer, making them less likely to switch to a competitor. It’s about being both useful and human, a combination that builds powerful, lasting relationships.
Here’s how to execute this strategy effectively:
Content Marketing for Engagement: Develop content that helps customers get more value from your product and succeed in their goals. This can include tutorials, case studies, expert interviews, or industry insights. The goal is to become a trusted resource, not just a vendor.
'Going the Extra Mile' for Delight: This involves proactive and personalized customer service. It could be a handwritten thank-you note, a surprise upgrade for a loyal customer, or quick, empathetic support that solves their problem on the first try.
These efforts show that you value your customers as people, not just as revenue sources. This emotional connection is often the deciding factor in retention and is what inspires customers to become evangelists for your brand. The full article explores more creative ways to engage and delight your existing customers.
The ability to deliver personalized experiences at scale is rapidly becoming the most significant differentiator in crowded markets. As products and services become commoditized, the quality of the customer experience is what sets a brand apart and builds a moat against competitors. This is the new frontier for creating long-term customer loyalty and driving sustainable growth.
Advanced analytics is the engine that powers this capability:
Predictive Personalization: Machine learning models can analyze past behavior to predict future needs, allowing you to offer the right recommendation or support at the exact moment it's needed.
Hyper-Segmentation: Beyond basic demographics, you can segment users based on their in-app behaviors, engagement levels, and preferences to deliver truly tailored communication and experiences.
Journey Optimization: Analytics allows you to map and optimize individual customer journeys, removing friction points and creating moments of delight that strengthen the relationship.
The future of retention lies in making every customer feel seen and understood, which is only possible through the intelligent application of data. Explore the complete guide to understand how to build the technological foundation for this strategy.
The decision of whether to prioritize retention or virality depends on your product's maturity and current user feedback. Focusing on the 'Retain' stage first is almost always the correct approach, as building virality on top of a product that doesn't retain users is like trying to build a skyscraper on a foundation of sand. You will simply accelerate churn.
Here’s how to weigh the factors for each stage:
Prioritize 'Retain' When: Your churn rate is high, user engagement metrics are low, or qualitative feedback indicates users are not yet experiencing the core value (the “Aha! Moment”). Your goal is to fix the “leaky bucket” before you pour more water in.
Focus on 'Reap' When: You have a strong, sticky product with a healthy retention rate. Your most engaged users are already recommending your product organically. This is the signal that you have a loyal base ready to be activated as brand champions.
The ideal strategy is sequential: first, ensure your product is valuable and engaging to create a solid core of happy users. Only then should you build systematic virality loops to empower those users to spread the word. Find more on sequencing growth initiatives in the full overview.
Amol has helped catalyse business growth with his strategic & data-driven methodologies. With a decade of experience in the field of marketing, he has donned multiple hats, from channel optimization, data analytics and creative brand positioning to growth engineering and sales.
Growth Strategy and Planning
