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The Why & How of Retaining Old Customers Rewarding your most valued customers is equally important to show them that they are a significant part of the company

By S.K. Arora

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The 'age of the customer' brings with it increasing competitiveness in almost every sphere. If a company fails to satisfy the end-user, then another one will pounce on the opportunity and add to its customer base. Theodore Levitt rightly summed it up by saying, "The purpose of any business is to get and keep a customer."

The process of building a steady clientele involves the acquisition of new customers as well as the retention of the existing ones. Although both aspects are equally important, the common mistake that companies make is excessively focusing on the new customers while disregarding the old. In fact, a study shows that only 18per cent of companies focus more on retention, while 44per cent continue to look for new ones. The truth is, however, that this tactic is more often than not counter-productive because it involves the extensive use of time and money while essentially giving a single shot at winning the new consumer. The cost of acquisition is estimated to be at least five times greater than that of retention, regardless of the industry in question. Another study conducted by Frederick Reichheld of Bain and Company found that increasing consumer retention rates by just 5per cent can boost profits by more than 25per cent.

Taking a cue from these statistical findings, it is crucial for startups to use their funds where a better return is expected. It, of course, does not imply that all finances should be diverted away from new acquisitions, but they must be efficiently reallocated to get maximum benefits. Keeping in mind the high correlation between customer satisfaction and customer loyalty, here are a few ways to keep your existing clientele engaged:

1. Keeping the Consumers Consistently Involved:

The key to retention is to ensure that you reach out to most of your customer base, and that too consistently. They must be informed about your products, events and new launches through text messages, emails or mobile applications. Social media can also serve as a great platform to interact with users and address any problems that they might be facing.

2. Identify and Reward Your "Whales":

Whales are your highest valued customers, those who spend around 10 times more than the average order value. Identification of whales is vital because they are the ones who will buy your products repeatedly, and will most likely to be convinced about any new launches that you may have. Rewarding your most valued customers is equally important to show them that they are a significant part of the company. Rewards can be in the form of additional perks, exclusive discounts or early access to mega-events. Loyal customers can also immensely help in building a solid reputation for the brand through word-of-mouth marketing.

3. Understand What Is Attractive to Customers

After understanding your clients, it is also essential to figure out what are the key aspects that make them want to work with you. It may be anything from a personalized experience to easy return policies that may be attractive to a customer. Any startup can capitalize on such information and mould its business model to suit the primary needs of its clientele. This goes a great way in ensuring that customers feel that their requirements are addressed and taken care of.

4. Importance of Human Interactions

With the advent of AI and bots, companies may forget the importance of human interactions while dealing with their clients. Automated responses indeed make the day-to-day functioning easier, but companies must not completely do away with the human touch. Adequate personal interactions over email or telephone can significantly boost customer experience and faith in the brand, which can further boost customer loyalty.


For any startup, the initial focus is undoubtedly on acquiring new customers, but in parallel, they must also develop ways to retain them. Customers can be the most significant asset a company has and can be enough to give the company an edge over its competitors.

S.K. Arora

Co-founder of Appsmartz and a Member of Chandigarh Angels Network.

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