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Team of Industrial Engineers


Improving Retention

Updated: Jul 21, 2023

Worried about staying top-of-mind and driving conversion and improving retention? According to an HBR report, repeat customers spend 33 percent more than existing ones and a 5 percent increase in customer retention can lead to at least 25 percent increase in profits. However, in our effort to remain top-of-mind, we may be doing more harm to the brand than helping increase transactions or improve retention. How do we leverage existing category habits and consumer behavior to ensure the right frequency, tonality and personalization of content?

customer experience, customer retention, consumer

Acquiring customers is easy, but retaining them...?

Catch them? Yes!! Retain them, well!!

Staying top-of-mind and driving conversion and repeats is critical for all brands. As per a HBR report published in Forbes, repeat customers spend 33% more on than existing ones and a 5% increase in customer retention can lead to at least 25% increase in profits.

The Giant Leaky Bucket

Our work at Elevate Insights shows that the Indian tech eco-system has a giant leaky bucket problem. Many unicorns have large customer bases running into millions. Having “acquired” customers, customer retention is poor, and growth is largely driven by new customers. Even as digital adoption has improved post-Covid, “retention” remains the number 1 issue to improve profitability for most!

retention, customer experience, consumer, consumer insights, purchasing power

Solving the Retention Conundrum

However, effective actions require us to diagnose the issues behind retention better. We recommend the following steps to diagnose and guide customer retention efforts:

1. Diagnosing Purchase Journey:

Most companies regularly monitor their funnel metrics to identify friction-points and improve the ease of transacting on their platforms. An inside-out metric analysis can detect some obvious drop-off points like registration details, payment options. However, an outside-in analysis of customers’ purchase journey and decision-making process is required to identify opportunity areas to improve when it comes to selection on app, app functionality, search, and choice related parameters.

2. Diagnose Category-specific issues and comparative gaps:

In our work we find that inherent category barriers and consumers’ purchasing power itself contributes to 50% of drop-puts. Another big chunk of dropouts can be attributed to competition and low loyalty in most categories. Identifying and sizing the key barriers via consumer research or informal immersions is key to right solutioning.

3. Driving Frequency:

Creating “proprietary demand” such as exclusive offers; loyalty schemes and offers are key to improving conversion and retention. Segmenting the customer database and understanding priority needs of customers can also significantly helps sharpen retention and marketing efforts. For examples, we may be pushing discounts to customers who are more focused on overall cost and there may be smarter pricing strategies to deploy for that segment.

4. A tailored digital marketing and retention strategy:

We recommend pacing both the frequency of reminders and the content leveraging category involvement and drivers’ frameworks such as Krugman’s.

Customer retention, consumer insights, conversions, digital marketing strategy

Further, a cohort level “personalization” may be a possible using past behavioural triggers even if you do not have sophisticated AI based tools.

In Sum:

Customer retention is tougher than acquiring new customers. However, it is a critical path to growth and profitability. It’s useful to leverage consumer empathy tools to deepen understanding of the category purchase journey, the typical frequency and consumption patterns an imperative to tie-in our digital marketing and content strategy with the category behaviour, as our marketing efforts can make our customers uncomfortable or worse impact disposition negatively.



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