I wanted to expand on this twitter thread I wrote a few weeks ago, because it got such a strong response.
I often break out advice into annual revenue tiers: $1M, $10M, $25M and so on. Why? Because you need different capabilities, and a different mentality, to break through each of these plateaus (unless you’re very, very lucky).
A lot of retention marketing destroys value. I explain why here, but TL;DR–most brands measure it the wrong, and sneaky SaaS companies use that fact to their advantage.
When you are under $25M in sales and have been in business for less than three years, returning customers won’t be a meaningful part of your growth. Time is the secret ingredient to retention success.
Your customer pool is a leaky bucket. For every 100 customers you acquire, you’ll be lucky if 30 come back for a second purchase–ever. Only 5-10 of those 100 will make purchases that span multiple years.
Each year you’re building up that pool of loyal customers, but it takes time before that revenue will make up a meaningful portion of your total sales.
I’ve worked with/for brands that have been in business for decades, doing $50M+ per year from customers who were acquired 10+ years ago. Those businesses can drive seven figures of upside from retention optimization BUT it takes decades to get there.
A big part of retention strategy for a young brand is avoiding negative influences and red herrings. When it comes to the latest SaaS you see hyped up on Twitter, you need to have the strength to say “not today, Satan”.
These are my recommendations on where to focus at each stage of growth, so you can be sure that your retention efforts actually make you money.