Better user retention significantly increases growth and profitability for any business, says CleverTap’s Co-Founder and CTO, Suresh Kondamudi

Customer retention has become an integral part of every brand’s marketing strategy. By increasing customer retention by just 10 per cent, an organization can boost the value of their business by more than 30 per cent. Moreover, it is 25 times more expensive to acquire a new customer instead of retaining your existing user. It is also important to note that positive customer experiences can boost customer satisfaction rates by 20 per cent and conversion rates by 10 to 15 per cent, at the same time lowering sales and marketing costs by 10 to 20 per cent. Overall, increasing customer retention by 5 per cent leads to an increase in profits by 25 to 95 per cent.  Bottom line is that customer retention is a precursor for business growth and profitability. Sharing his thoughts on the importance of customer retention to build brand loyalty is Mr. Suresh Kondamudi, Co-Founder and CTO, CleverTap


  1. What is the importance of customer retention for all businesses?

Specifically, for mobile apps across all industries the “leaky bucket” problem is very real – 90% of users are lost within the first 3 months according to multiple data studies. Imagine retaining even 10 or 15% of these users for longer and what a difference that would make to a business.

There is some research from Bain & Company that shows there is a 75% increase in profits for a business by increasing your customer retention rate by just 5%.

In summary, customer retention becomes a critical part of growth for any business.


2.    What are the business benefits of customer retention vs acquisition?

The business benefits are very clear– better user retention significantly increases growth and profitability for any business.

A study from INC states that you can expect an average of 67% more revenue from a repeat customer as compared to a new customer.

Another study from Harvard Business Review found that it is 25 times more expensive to acquire a new customer compared to retaining your existing base.

We have seen this kind of impact with our customers across Media & Entertainment, FinTech, Education Technology, Food, e-Commerce and Health & Fitness– pretty much across the board.


3.    What are some of the case studies where CleverTap helped businesses with their customer retention needs?

There are multiple case studies on our website, but one that comes to mind is Carousell, which is a large digital marketplace for new and second-hand goods. Carousell increased week 3 retention by 71% by using deep personalization and product recommendations matching every user to the right content at the right time.


4.    What are the differences between various industries from a customer retention point of view and customer behavior?

Differences across industries primarily comes from the following:

  • monetization models for example subscriptions, transactions, Freemium and/or AD driven monetization models
  • frequency of use patterns i.e. you might be on your Spotify or your favorite news application multiple times a day. On the other hand, you use Expedia or your favorite travel app to book airline tickets maybe 1 or 2 times a year when planning your vacation

However, irrespective of these differences many user retention principles are pretty much the same. Retention starts on day one, when a user launches an app for the first time. It starts with a magical onboarding experience and goes on with hundreds of delightful experiences throughout a user’s journey. These experiences can be created with user insights, segmentation and using data to personalize every touch point across omnichannel messaging as well as app usage.


5.    What technologies are at the forefront of helping businesses increase customer retention?

Hyper personalization across all touchpoints is key for effective customer engagement. This is only possible if we are able to better understand the customers across the dimensions like application behavior, interests, demographics, geographics and so on and so forth.

The ability to store, process, extract insights from all the customer and business data and then make them accessible and actionable in real time is an integral part of solving this problem.

Technologies built upon these principles enabling businesses to address the customer retention needs at affordable costs are the best fit.

An afterthought approach like stitching multiple siloed systems together isn’t ideal and usually ineffective, leaving a significant number of use cases left unsolved and also taking the total cost of ownership significantly high.

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