Growth hacking, while always surrounded by a bit of mystery and misconception, is an interesting and potentially highly lucrative way of growing a business or expanding to new markets or audience segments. 

An often undervalued aspect of this tactic is retention. Why is it so important, and how will it help you reach your growth hacking goals? Read on to find out. 

What Is Growth Hacking? 

Growth hacking is a term coined in 2010 by Sean Ellis, and it describes a process of rapid experimenting with various strategies with the goal of growing a business as soon as possible. 

It was first used by Silicon Valley companies but has since been adopted by marketing agencies and companies big and small. It is particularly loved by startups with limited budgets looking to make a name for themselves. 

Today, growth hacking is quite popular, and there are even marketing specialists calling themselves “growth hackers” who specialize in this field. 

Growth hackers will run several experiments at the same time, trying to pinpoint the strategy that works best for a particular business. They will scan the entire marketing and sales funnel, looking for opportunities. They will, given the nature of the task, need to focus on both customer retention and customer acquisition to reach their goals. 

What Is Customer Retention? 

Customer retention is keeping the customers you already have, as opposed to customer acquisition, which is finding new people to do business with. 

Retention is the often-overlooked element of business growth that yields the biggest returns. After all, if you just keep cycling through new customers without catering to the ones you already have, there will be no growth to speak of. As little as a 5% increase in retention can boost your profits by 95%. 

Customers are more likely to keep working with a brand they have had a positive experience with, as it saves them time and effort. This makes customer retention one of the best ways to grow, plus it is more cost-effective. It can cost five times more to acquire a new customer than to retain an existing one. 

You can calculate your customer retention rates like this: 

Customer retention rate (x) = [(Customers at the end of a period – Customers at the beginning of a period)/Customers at the start of the period] * 100

You can use this formula for any given period of time. Most brands will look at monthly, quarterly, and yearly numbers to analyze the effectiveness of their current retention tactics. 

Growth Hacking Strategies for Customer Retention 

Now that you understand the importance of customer retention for growth hacking, let’s take a look at some strategies you can implement: 

Email Drip Campaigns 

The aim of an automated email campaign is to re-engage customers and get them to convert again. It is completely automated, and customers are segmented based on the stage of the customer journey or sales cycle they are currently in. For example, if a customer has not made a purchase in six months, they will be in one bracket, and if it’s time for them to buy a refill for a product they already own, they will be in another. 

These campaigns rely on the data you have already collected about each individual user. They aim to share information that is likely to get them to at least visit your website again, or, at best, to make another purchase. 

Chatbots 

Chatbots are a great way to both improve the UX on your website and increase customer retention. Note that setting them up properly is crucial. An inefficient chatbot who keeps deferring all questions to human customer service reps is not going to provide a pleasant experience. 

Chatbots can help you gather customer data and point you in the right direction to improve your current products or services. Since they provide immediate responses, they will retain those customers who want to get their questions answered as soon as possible, especially if they are product- or shipping-specific. 

Make sure you also have a live agent available at certain times of day (which should be clearly displayed on your website) so that those who prefer talking to a human get the chance to do so. 

Dividends 

Offering your customers the chance to also invest in your business can be a great way to turn them into brand advocates. After all, since they are not expecting to see a share of your profits, they will do what they can to increase them. 

Some of the top dividend stocks provide very high and steady yields. While you may not initially be able to match these figures, as long as you make yourself an attractive investment, you can expect the investment-savvy among your audience (and outside it) to take notice. 

This is also a great way to grow your audience base, as you can expand your marketing and promotion channels by going public. It will also incentivize you to grow and better your business, as you will not be accountable to more than just yourself and your staff. 

Referrals and Rewards 

Establishing a referral and reward system is a great way to boost customer retention and acquisition in one fell swoop. It will provide an incentive to your existing customers to stay with you and promote you in their friends and family circles. 

Make sure that the rewards you give are worth it. Discounts and freebies are the usual way to go; all you need to do is find the sweet spot that fits your audience’s needs. Make sure there is also something in it for the person converting for the first time. An initial discount is a great choice. 

You should also consider influencer marketing as a tactic or set up an affiliate program that will provide your marketers with a steady revenue stream, provided that they help you increase your own sales. 

Wrapping Up 

In order to maximize your growth hacking efforts, make sure to take all of these retention strategies into account. Most of them are automated and will require an initial effort, after which they will keep working in the background, allowing you to focus your energies elsewhere.