[ibimage==32678==Large==none==self==ibimage_align-center]
There’s an old business adage: "It costs more to find a new customer than to keep an old one." Jerry Jao, and his company Retention Science, are betting their future - and their investors' - on that belief.
Retention Science, a marketing platform designed to help e-commerce companies retain current customers, just raised a $7 million Series A funding round led by LA-based venture capital firm Upfront Ventures. The company’s platform examines customer behavior and recommends different marketing efforts.
“One of our missions is for businesses to understand the value of the existing customers and focus on this gold mine that they often ignore,” said founder and CEO Jerry Jao. “Existing customers are actually worth more, especially when they have had a positive experience with you.”
The Retention Science platform has several different features that make recommendations to marketers including suggesting the right time-frame for reaching out to a customer, suggesting better product recommendations, offering deals and gaging a customer's interest level.
For example, customers that repeatedly visit a product page, get 30 percent off instead of 20 "because we know he is really interested,” said Jao.
Technology like this is already being used by large e-commerce businesses, but Retention Science is focusing on smaller businesses that don’t have the cash and know-how to build a large in-house system.
In fact, the company got its start by selling to a number of Los Angeles e-commerce startups including ShoeDazzle, NastyGal, Dollar Shave Club, PriceGrabber.com, eSalon.com and the Honest Company. In the ultimate act of customer retention, The Honest Company founder Brian Lee, Dollar Shave Club founder Michael Dubin and PriceGrabber.com founder Tamim Mourad returned the favor by investing as angels in Retention Science.
According to a study cited by Retention Science “a 5 percent increase in customer retention increases profits by up to 125 percent.” Jao said he believes businesses have not been taking advantage of these potential profits because they lack insight into customer retention marketing.
“If you’re spending $5 on an ad and it brings you a new customers, it’s very clear," said Jao. "If you’re tracking customer retention, it’s not as clearcut that the results are there right away. Quite frankly they can’t afford to wait without immediate results."
And that's probably because “most businesses don’t have a lot of data scientists to look into their data," said Jao. Without powerful software and data scientists to make sense of customer behavior most businesses choose to focus on what they understand better: finding new customers. Retention Science's software platform is built to be easy and actionable enough for anyone to make data-driven marketing decisions about current customers. With that intelligence companies may be able to reapt new profits and from old customers.
In addition to Upfront Ventures, and various angel investors, Retention Science is funded by Baroda Ventures, Forerunner Ventures and Mohr Davidow Ventures. Baroda Ventures is also a Los Angeles-based venture capital firm. With its new funds Retention Science plans to double its 22-person employee count by the end of the year, especially in sales and marketing disciplines.
