Now that we've covered the three As of the Pirate Funnel - awareness, acquisition, and activation - it's time to move forward to the R steps. This half of the funnel is where visitors turn to paying customers, and where that customer base grows to the point where your business can thrive. The first of these steps, perhaps somewhat surprisingly, is retention.
It may seem odd that retention and referral come before revenue. After all, don't customers need to make a purchase in the first place before you start worrying about getting them to come back again with their friends?
The answer to that question depends somewhat on the type of business you have. If your business is based around SaaS or other subscription models where there are tiered levels of membership (free and premium), then retention absolutely has to be your number one goal. Keeping customers perpetually active is the foundation of getting them to the point where they see the value in both paying for your service, and bringing others on board.
If your business is primarily based on direct sales (for example, some kind of retail shop), then customer purchases will factor in more heavily earlier on, but retention, referral, and revenue will still be working together in a kind of feedback loop. In either case, retention is the driving force that will keep the revenue coming in, so regardless of your business model, retention has to be the priority. In the context of long-term strategy, there is little point in getting a customer to buy one item if they never come back again, and if they don't feel compelled to tell anyone about the purchase they made.
Retained customers are those who keep coming back, who want to know what new products and services you can offer them, and who talk about your business to their friends and social networks. These customers are the lifeblood of your business.
This means that you need to have two top concerns:
- Keeping customers happy. Make sure that you're offering quality at every step of the customer journey. If you have a physical product, it needs to be well-made, durable, and a pleasure to use. If you offer a service, it needs to be frustration-free, work correctly, and meet or exceed expectations. In addition, your customer service has to be on point - you must be transparent and enthusiastically communicative, and you must be willing and eager to listen to feedback and adjust accordingly.
- Keeping customers interested. Even if you're doing everything right, people will still get bored and abandon your company if you're never changing things up or innovating. What happens when your customers get tired of the same old thing over and over? You constantly have to be asking yourself what comes next - how can you make your existing products or services better? What new ideas would help your customers even more? What have people been asking for that you could start providing?
These are the key factors to get customers to stick around for the long haul. Next time, we'll talk about what happens when retained customers help bring in new ones: referral.