When looking at B2B startups, it’s super easy to get impressed by a well-executed growth model that brings new customers in in droves. Of course it is; sales is an art and can be a super tricky one at that, so every time a startup succeeds in closing a deal, it’s reason to celebrate.
But what I personally like to celebrate more is their ability to keep their customers happy by ensuring a high retention and thus a super low churn.
That – to me – is the most powerful indicator of a startup delivering real value to customers by successfully solving a problem, the customer has.
When I meet with startups there are always convincing narratives about how to find and attract new customers and close the deal. But with startups who already have their first product in market, I often find that the story becomes slightly less convincing, when we talk about retention and churn.
Sometimes the story about retention becomes so weird or non-logical that I just assume that the startup in question has a real problem in that department, and they are more than reluctant to share that with me. That – in all honesty – is a huge flag.
Having to work hard on retaining your customers is hard work and honest work. Because even though you may have a great product, lots of other startups or big corporations are out to get your customers with everything from a slightly better product to one that is just a lot cheaper (and perhaps even loss making) than what you have to offer.
You need to have a plan for keeping retention high, and you need to execute on it like your life depended on it. To some extent it does; at least the prospects of your startup ever becoming a viable business.
You need to show that you understand what’s going on, and that you understand what you need to do to keep your customers engaged, happy and finding the best value in your product. And you need to always optimize that approach to ensure that your win didn’t only happen once, when you closed the deal, but that by keeping the customer, you essentially have what it takes to keep on winning.
When you have that, it’s truly worth celebrating.