Aishwarya Ramesh

Acquiring and retaining the restless modern customer

At the first edition of afaqs! Startup Brands Summit, marketers discuss the two most challenging facets of customer acquisition in modern times.

During the recently concluded afaqs! Startup Brands Summit, a panel got together to discuss the topic – ‘Customer acquisition versus retention’. The panellists were Amritanshu Nanda, chief marketing officer at Zepto; Ritesh Ghosal, a solopreneur; and Sahil Narang, entrepreneur-in-residence at The Whole Truth Foods.

The session was moderated by Venkata Susmita Biswas, executive editor at afaqs!.

Biswas invited Nanda to make the opening remarks. She asked him about all the effort that goes behind customer acquisition – does it necessarily mean that customer retention is put away for data-marketing purposes? 

Nanda’s response: it’s not an either-or question; both have to go hand-in-hand and are important for business growth. 

“The stage that a business is in, also matters. If the business is in its initial stages, we’re looking for a product-market fit. We’re looking for baseline retention behaviour before we actually start investing money into it. Contrary to popular opinion, customer retention is what I’d focus on, because customers are already exhibiting some acceptable baseline retention behaviours,” he says.

The Whole Truth Foods’ Narang agrees with Nanda’s point, saying, “When you’re just starting out, you need to acquire some customers before you can start retaining them.”

Ghosal points out that it doesn’t matter if it’s a legacy business or a startup. Ultimately, both exist to make money. He adds that the first transaction a customer makes with the business, is essentially a trial. Once the brand has advertised and gets a customer on board, then the latter’s journey with the former, begins.

Biswas raises a question – how does a brand really make a customer come back? Narang responds by saying that the nuances of customer retention differ across industries and, every month, a consumer makes a fresh purchase decision. 

“People shop for groceries every month and if you remind them of your brand before the purchase, you can retain customers well. In marketing, there is a saying, ‘Out of sight, out of mind’. So, it’s important to have visibility with your existing as well as new customers.”

Narang adds that unlike other industries, in the electronics space, the purchases are more frequent. There is also a higher chance of repeat purchases.

Nanda agrees that these repeat purchases are important. Zepto’s presence on the mobile platform makes it easier for it to nudge customers to shop, based on different purchase triggers (such as sending push notifications to buy ingredients to make ‘bhajiyas’ when it’s raining outside).

As far as quick commerce goes, Nanda mentions that the reason the retention is so high in this category, is because of the impulse nature of the service being provided. But there’s also a lot of competition in this category. 

Impulsiveness is a selling point that Zepto has used in the past too. One of the earliest Zepto ads featured a young woman, who runs out of ice cream mid-show, and immediately calls for more, using Zepto. This is in contrast to Swiggy Instamart, which always positioned itself as a quick solution to a grocery-related need/problem.

Ghosal brings the conversation back to the topic of acquisition versus retention, by mentioning that the gap between the two is primarily caused by a lack of access to data. 

“If it’s a new customer, I need to fight really hard to pitch my product to him. If it’s a repeat customer, I just have to let him know that the product is available. That kind of data is not easy to come across in the D2C world and online marketplaces.”

The Whole Truth Foods is a D2C-first marketplace and Narang says that the company gets all the data it needs from its own website. He, however, adds that it can be an expensive affair to drive relevant traffic to the website. 

“Once you accumulate a minimum set of consumers, you can validate your hypothesis. We use the limited data that we have to try and see if our products are working with the consumers. We try to gauge feedback, sometimes reaching out to them and asking for it. If any changes need to be made, we course correct there itself, before making the product available on online marketplaces or offline retail outlets.”

Nanda says that another issue with gathering data is ‘analysis paralysis’. The focus has to be on getting the right inputs. “The good news is that in today’s day and age, we have different ways of listening to consumers and getting their feedback.”

You can watch the full discussion below.

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