Customer Acquisition and Retention: Winning Strategies for MSMEs

10 August 2023

In the fast-paced business landscape, customer acquisition and customer retention strategies are vital for the success of MSMEs (Micro, Small, and Medium Enterprises). In this article, we will explore winning strategies to attract and retain customers, empowering MSMEs to build strong, sustainable relationships with their target audience, driving growth and long-term success.

Customer Acquisition And Retention

Customer acquisition is the procedure of acquiring new customers through marketing for a company or organisation. It focuses on attracting and converting potential customers into paying customers, which is usually efficient through marketing.

Customer retention strategy refers to the activities used by businesses to keep their existing customers and encourage them to purchase their products or services in the future. 

Decide Your Customer Retention Rate

Before making any improvements to your ongoing strategy, it’s a smart idea to figure out what you’re working with. Begin by looking at your customer retention rate.

You can calculate this number by deciding how many customers/clients you have at the end of specific time span, such as a month or quarter, then deducting that by the number of new customers you acquired during that time span, dividing it by the number of customers you had before that time, and then increasing by 100.

Customer retention strategy rate= (# of new customers at the end of a given time period) - (# of acquired customers during that time period) / (# of existing customers at the start of that given time period) x 100.

8 Challenges in Customer Acquisition and Retention for SMEs:

  1. Inadequate/Wrong Targeting: Failing to accurately identify and understand the target customer base can lead to inefficient allocation of resources. Without a clear understanding of who your ideal customers are, marketing efforts might miss the mark.
  2. Ineffective Marketing: Insufficient marketing strategies stop reaching potential customers. Properly conveying your brand's unique value proposition to the right audience is crucial for capturing their attention.
  3. Competition Struggles: In a competitive market, MSMEs might struggle to stand out against larger or more established competitors. Limited resources could limit your ability to employ extensive marketing campaigns or offer competitive prices.
  4. Neglected Customer Interaction: Not engaging with customers effectively, whether through inquiries, complaints, or feedback, can lead to disconnection and dissatisfaction. An active and responsive customer support system is crucial for retaining customers and attracting new ones.
  5. Service Quality Issues: Providing subpar/poor services not only results in dissatisfied customers but also damages your reputation. Poor word-of-mouth reviews and negative feedback can significantly stop customer acquisition efforts.
  6. Unsatisfactory Customer Experience: Beyond the quality of your product or service, the overall experience matters. Difficult purchasing processes, confusing navigation on your website, or lack of personalised interactions can deter potential customers.
  7. Unmet Promises: If your SME offers discounts, rewards, or special deals, failing to deliver on these promises destroy customer trust. Consistency between what you advertise and what you provide is crucial for building credibility.
  8. Product Damage: Delivering damaged or substandard products not only results in customer disappointment but also potential returns and refunds. This can harm your bottom line and reputation.

Navigating these challenges requires a comprehensive understanding of your target market, well-crafted marketing strategies, a commitment to exceptional customer service, and a dedication to delivering on promises. Addressing these aspects can create a positive environment for customer acquisition in the competitive landscape of MSMEs.

6 Best Winning Strategies for Customer Acquisition for SMEs 

A robust customer acquisition strategy pushes business growth. At any stage, understanding how you attract and expand your customer base is crucial.

  1. Identify Target Audience:- Define customer traits, preferences, and needs. Craft a product aligned with this insight to nurture a strong company culture.

  2. Choose Acquisition Channels:- Select suitable channels that resonate with your business. Internet platforms offer cost-efficient avenues for customer acquisition and brand awareness.

  3. Create & Promote Video Content:- Use the power of videos for lead generation. Reports highlight that video content enhances B2B marketing and is a preferred content type for consumption.

  4. Offer Free Trials:- Engage potential customers with free trials to build familiarity and generate leads. This aids in showcasing your product's value before a purchase.

  5. Focus on Quality Content:- Quality content shared on social media enhances brand visibility. Following a structured process for content creation and distribution improves online presence.

  6. Local Marketing:- Engage with your local community through events, partnerships, and collaborations. Join local business associations and attend trade shows to increase your visibility. The right customer acquisition strategy fuels business success by attracting and engaging your target audience effectively.

Effective Customer acquisition examples for SMEs 

Example : Khata book 

How Khata book acquired 10M+ users within one year of launching?

Khatabook, an Indian fintech startup, achieved remarkable success by acquiring over 10 million users within a year of its launch. First, Khatabook identified a critical problem faced by small and medium-sized businesses in India – managing their financial transactions and bookkeeping. By offering a user-friendly mobile app, Khatabook provided a solution that resonated with businesses still relying on traditional paper-based methods. 

The app's accessibility in multiple Indian languages further expanded its reach. Leveraging word-of-mouth, partnerships with financial institutions, and collaborations with payment platforms, Khatabook facilitated a seamless transition from offline to online bookkeeping. 
In this way Khata Book acquired 10M+ users within one year of launching. 

6 Best Winning Strategies for Customer Retention for SMEs 

In the dynamic landscape of business, customer retention strategies have become pivotal for sustained success. Here are the points of effective approaches that can maintain your efforts in retaining customers and fostering lasting relationships:

1. Promote Customer Support
Elevate customer support through live chat, help desks, and responsive communication channels. This transforms queries into sales and objections into resolutions, enhancing customer satisfaction across platforms.

 2. Initiate a Loyalty Program
Introduce customer loyalty programs that incentivize repeat purchases through enticing rewards. These programs stimulate purchase frequency, nurturing brand loyalty and enhancing customer lifetime value.

3. Craft Engaging Emails
Utilise emails for pre and post-purchase engagement. Initiate follow-up emails to express gratitude and nurture relationships. Send a post-purchase discount code to encourage repeat business.

4. Launch a Referral Program 
Use the power of word-of-mouth by initiating referral programs. Encourage existing customers to refer new ones with incentives, generating brand advocacy.

5. Personalised Shopping Experiences
Elevate engagement through personalised experiences. Recommend products based on preferences, offer tailored education, and create unique shopping journeys.

6. Simplify Returns
Streamline return processes to build trust. A seamless return experience ensures customer confidence and encourages repeated interactions.

Implementing these strategies can create a synergy that transforms customers into brand ambassadors, paving the way for sustainable business growth and prosperity.

Effective Customer Retention examples for SMEs 

Example 1: Samosa singh

Samosa Singh's effective customer retention strategies contribute significantly to their success. 

Samosa Singh maintains the quality of their samosas across all outlets. Consistency in taste, and freshness creates a reliable and satisfying experience for customers. They provide samosas with a variety of fillings, and they also customise samosas according to their customer's preferences. So that customers can be engaged and curious to try different options of samosas and return to try samosas, For repeat customers they give special discounts and rewards. They also actively listen to customer feedback and suggestions. Samosa Singh values its customers' opinions and is committed to improvement.


In the realm of MSMEs, customer acquisition and customer retention strategy are pivotal. Effective tactics not only attract but also nurture customers, fostering long-lasting relationships that drive growth. Through personalised approaches, loyalty programs, and user-generated content, businesses can thrive. Both customer acquisition and retention hold the keys to enduring success.

Ready to enhance your business's success? Let’s apply these winning strategies for customer acquisition and retention. Implement personalised approaches and foster strong customer relationships. 

We'd love to hear your thoughts! Have you tried any of these strategies? How did they work for your business? Share your experience and feedback with us. Your insights help us refine our content and provide valuable information to our readers.

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