Startup Diaries: Prioritizing retention from the get-go
One of most fundamental questions in marketing is whether to prioritize customer acquisition or retention. In the dance of business, how much attention do you pay to the customer who’s in your arms versus looking over their shoulder to see who else you want to ask next?
What I’ve learned in both my work and personal life so far is that all the joy and meaning is in retention.
It can be hard to see this in the early days of a company or a career because acquisition is sexy and alluring. I’ve spent my life so far focused on acquiring knowledge, financial security, experiences, and (even though the word doesn’t work as well I’m rolling with the analogy here) friendships. Running a VC-funded high growth startup, it was our customer acquisition numbers that dazzled. Without them, I wouldn’t have been invited to take a seat at the table.
And because acquisition comes before retention as a timing matter in the customer journey, it’s easy to fall into the trap of focusing most of your energy there first. After all, if you have no customers, how can you retain them?
The thing is, what comes first isn’t necessarily the problem you should be spending most of your time solving. The same way that movies aren’t shot in chronological order, a company’s priorities shouldn’t be determined by what happens first for a customer.
In the early days, it feels inefficient as a business to be writing content, reaching out, and creating unique experiences for just the handful of people who know about you. But overinvesting in retention of your first customers is waaayyyyy better than overinvesting in marketing to acquire new customers who won’t stick around. If we build it, they will be more likely to stay here when we invite them in. Afterall, why would you invite someone to come live in your house if you haven’t yet put on a roof?
By the way, product is not the same thing as a retention program. It’s hard not to invest in acquisition if you’ve done the hard work of creating a product that’s ready to sell.
At this moment in Tokki’s story, I’m so excited about our product and our product roadmap. I can see that we add delight to the gifting moment. That we make wrapping easy, more meaningful, and less wasteful. While the product can be improved, it’s pretty crazy awesome.
But we don’t yet have all our ducks in a row to engage in a rich, ongoing conversation with our purchasers. So for now, we are prioritizing that work over building effective acquisition campaigns.
This time around, I’m thinking about the role of acquisition as being in service of retention. Instead of starting out with financial objectives and driving acquisition programs to reach them, I’m trying to focus on retention objectives and then backing out what financial resources and acquisition levels I need to achieve those. Acquisition ends at the first purchase – it’s about finding the right customers and speaking to them in the right way so that they are willing to give you a shot. With Tokki, and elsewhere in my life, I’d like to be as successful at acquisition as I need to be in order to afford to invest in meaningful retention.