The majority of today’s internet marketing efforts – and marketing efforts in general – focus more on getting new users. User acquisition is always a big jargon among start-ups, mainly because it is a metric commonly used by both companies and investors to measure the success of a start-up. Attracting new users is also considered important because the number of users a start-up plays a big role in valuation. The more users you have, the more valuable the company is.
In reality, however, acquiring new users is not enough. Start-ups must also focus on maintaining good relationships with their users or customers. There are several reasons why maintaining good relationships with customers is important.
Users vs. Active Users
While the number of users an app has or the number of sales generated by a product is important, a more important metric to focus on is active users; this is the number of users that are actively using apps or services provided by your company. Higher retention means users go beyond just trying the app or product out of curiosity. It signals that your product actually brings value to them.
Active users are becoming more valuable to investors. User acquisition may be important, but investors and founders alike are starting to put more energy into ensuring user satisfaction. It also helps start-ups make the necessary improvement to their products, services, or apps.
Another important point to keep in mind about active users is that the metric applies to all kinds of businesses. If you’re selling tangible products, your active users are those who actively use the product they purchased, or repeat customers who continue to buy your products in the future.
Increased Profitability
Based on the previous example, it is easy to see how active users can influence profitability. You can only rely on new customers for so long; at some point, you’ll have no more market to explore and bringing in new users will be incredibly difficult.
Start-ups who invest early in their relationships with customers won’t have to worry about losing active users. They already have happy customers using the products and services they provide, which means they can focus their energy on making further improvements to the user experience in general.
The fact that maintaining relationships with customers is easy makes the whole thing even better. You can, for instance, use bulk SMS marketing from service providers such as Reach Interactive to send notifications, new promotional offers, and other information, directly to valued customers.
Better Return on Investment
A recent study by Forbes revealed that acquiring new customers can be six to seven times more expensive than maintaining existing ones. That repeat order you get from a single customer is actually bringing in more profit than getting five new customers, simply because the cost of acquiring those five new customers is far more expensive than the cost of maintaining a positive relationship with an existing user.
As you can see, building and maintaining relationships with customers or users is crucially important, especially for start-ups who are just getting started in today’s competitive market. Start directing your energy towards retention and enjoy these benefits in return.