How to Increase Customer Retention At Your Startup

Reading Time: 5 Minutes

Contributed by AbstractOps

If you’re an early stage CEO, AbstractOps handles and automates your HR, finance, and legal ops — so that you don’t have to. We help you Be Scrappy, Not Sloppy.

We understand that business operations can be painful. If you have any questions or need assistance with your ops, drop us a note at We’ll do our best to help.

The major goals of most startups at their early stage is increased brand recognition, product development, and customer acquisition. Among these goals, the majority of startups tend to place a lot of attention on customer acquisition. As a result, they spend the bulk of their capital developing and implementing new marketing strategies targeted at gaining new customers but not retaining them.

This, in turn, leads to customer neglect, loss, reduced revenue, and limited business growth. And, unfortunately, only a few startup founders know this – customer retention is the end goal of customer acquisition and is just as important as it is.

Customer retention is an easier and cost-effective way to promote your brand, market products, and ultimately increase revenue. Maintaining existing customers who are loyal offers more benefits and requires less effort compared to customer acquisition.

Startup founders who intend to enjoy these benefits must understand the basic concept of customer retention, recognize its importance, and develop strategies targeted at customer retention. This article will explore customer retention, its importance, and proven customer retention strategies that startups can adapt to increase sales and revenue.

What Is Customer Retention?

Customer retention is the ability of businesses or brands to convert new customers to returning customers for an extended period through well-thought strategies that improve a business-customer relationship. It involves a conscious effort to earn the loyalty of each new customer to retain them, exchange value, and maximize the revenue gained from them.

Customer retention is significantly different from customer acquisition or lead conversion. Here, customers are already converted and are continually engaged to increase trust and preference, build customer relationships, and increase patronage.

Returning customers are one of the most valuable assets of every startup. They serve as brand ambassadors, marketers, and consistent sources of revenue due to brand familiarity.

Nevertheless, although customer retention is important to startups, deciding when to direct time, effort, and resources into it is also vital.

For instance, a seed or early-stage startup should be more focused on brand building and promotion, product development, and customer acquisition. But, as the startup grows, gains market stability, converts leads and gets new customers, clear strategies must be put in place to foster customer retention.

Why Customer Retention Is Important to Startups

Customer retention is highly important to all businesses – small or large. The ability to retain loyal customers positively influences your startup in all areas. The benefits of customer retention to startups are numerous.

It increases referrals and customer acquisition

Customer retention is not just converting new customers to loyal returning ones. It is consistently delivering standard and reliable products and customer service that can convert customers to brand ambassadors.

For instance, a fashion designer who delivers beautiful quality clothing in accordance with each customer’s taste and instruction, offers excellent customer service, and adapts effective customer retention strategies will gain customer loyalty. Moreover, these newly acquired loyal customers are more likely to refer that fashion designer to their circle of friends with or without being influenced to.

New customers are more likely to patronize a business, product, or service when introduced to them by a trusted friend, partner, or relative. This increases brand recognition, improves sales, and ultimately enhances your business’s growth. Therefore, it will be a great idea to offer customers to join the referral program and do referral tracking to increase the efficiency of those campaigns

It reduces costs associated with customer acquisition

Increased referrals ultimately translate to customer acquisition. When existing customers consciously or unconsciously become brand ambassadors, they reduce the need for customer acquisition.

Startup founders who can build a community of loyal existing customers will need to invest fewer resources, effort, and time into acquiring new customers. Repeating customers can easily serve as a marketing and lead converting strategy for your startup.

Customer retention increases revenue

Customer retention is one of the most significant retail revenue drivers.

Loyal existing customers are more likely to make repeat purchases compared to new customers. Most of your returning customers are also likely to try out your newly released products due to trust and brand familiarity.

This is most significant when your returning customers contribute the bulk of your revenue. Therefore, an increased repeat purchase rate results in higher revenue. 

Marketing to existing customers costs about five times less than marketing to new customers. This reduces the need to spend acquired revenue, thus, increasing revenue.

Proven Customer Retention Strategies

The popular mistake most startups make is the failure to develop strategies to retain customers after lead conversion. The bulk of startup founders think that having a great product or offering quality services automatically retains customers. As a result, most of them fail to develop strategies or develop poor strategies directed at retaining their new and existing customers.

Developing the right customer retention strategies and adapting them is key to business growth. Startups that can define these strategies early have a higher chance of standing market competition and maintaining stable business growth.

As a startup founder, you can either develop creative strategies that spur loyalty or adapt some of the proven customer retention strategies that more prominent brands use, such as

Creating a customer feedback system

Getting customer feedback through social media polls, email surveys, pop-up forms, etc., to understand customer pain points, problems, and how they feel about your business is key to customer retention.

Knowing what your customers think about your business can help you address lagging areas to serve your customers better. Doing this makes your customers feel involved, improves service, and ultimately increases customer retention.

Improving on customer service

Standard and effective customer service is an effective way to retain new and existing customers. You can achieve this by creating searchable FAQs, consistently available website Chatbots, email support, call centers, etc., to improve customer service.

We live in a digital age where everyone wants to get everything done quickly and effectively. Creating a team and system that attends to customers’ needs immediately and effectively can help retain them.

Start loyalty programs

Customers will gladly come back for a purchase if they know they will be rewarded for making repeat purchases. Likewise, loyalty programs are an effective way to motivate customers to make more purchases. Here, there’s an exchange of value between you and your customers – both parties benefit.

Some other effective customer retention strategies include

  • Personalized contents
  • Valuable Upsells
  • Customer Education
  • Offering special and discounted offers
  • Personalized follow-ups, etc.


Although gaining new customers indicates business growth, losing them can counter the efforts put into acquiring them. Therefore, your returning customer base is an asset that you must guard jealously.

Developing new ways to meet their needs, maintain trust, give value, and improve their customer experience is a great way to boost your startup’s revenue. With the right customer retention strategies, your startup can experience growth on all levels.

For more information, check out:

I'm Allison Dunn,

Your Business Executive Coach

Join our list for exclusive tips, content and a welcome gift – our ebook on how to engage your team and boost profits.