Helping Marketers Hold On to What They’ve Got, Retention Science Raises $7M Series A
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By Lora Kolodny
Retention Science helps marketers mine their own data to understand what their existing customers want next.
To help marketers understand and generate additional business from existing customers, WaJao Inc., better known as Retention Science, raised $7 million in Series A funding, Venture Capital Dispatch has learned.
Chief Executive Jerry Jao, a Retention Science co-founder, said Upfront Ventures led the investment joined by his company’s earlier backers–Baroda Ventures, Forerunner Ventures and Mohr Davidow Ventures–and angel investors.
According to a Retention Science study of 163 e-commerce companies in English-language markets, 67% of an online seller’s revenue comes from 32% of its existing, or returning customers.
Yet a majority of spending by marketers, even beyond e-commerce, goes towards customer acquisition and “growth hacking,” Mr. Jao says.
That means companies have been willing to spend on drumming up new business but haven’t realized the “revenue goldmine” of keeping existing customers happy.
Retention Science helps retailers use internal data to figure out when to send an offer to a customer, what kind of offer will make them happiest, where they’d like to be contacted, and when.
Founders at several of the companies that used Retention Science in the past have just become investors in the startup, including Brian S. Lee, founder of the Honest Co., Dollar Shave Club Inc. founder Michael Dubin, PriceGrabber.com LLC and eSalon.com founder Tamim Mourad, and Andy Dunn, founder of Bonobos Inc.
With its Series A funding, Retention Science plans to hire sales and marketing staff and data scientists who can demonstrate and preach the art and science of “retention marketing,” even beyond retail.
Investor Greg Bettinelli, a partner at Upfront Ventures, said while very large retailers may have been able to glean insights about what makes their customers tick using their own proprietary systems, for most companies real-time reporting and customer segmenting on the order of what Retention Science now offers had been out of reach.
The early employees of Retention Science, a marketing tech startup in Santa Monica, Calif.
Aside from rising brands like the Honest Co. and Bonobos, Retention Science now boasts at least a dozen top-500 global Internet retailers among its clients, though the CEO did not have permission to name all of his clients publicly.
Mr. Betinelli said he expects Retention Science to continue to “take very powerful data and make it very easy to use” for chief marketing officers, even beyond retail in industries including news, media and entertainment, insurance and more.
In earlier waves of enterprise tech, venture firms backed makers of marketing automation systems like Responsys Inc., Eloqua Inc., ExactTarget Inc. and SilverPop Systems Inc., which were acquired respectively by Oracle Corp., Salesforce.com Inc., Adobe Systems Inc. and International Business Machines Corp., or Marketo Inc., now publicly traded.
But customer retention management is so nascent as a practice within marketing that Retention Science faces little competition from large and startup players alike–for now.
That could change soon, as companies become more aware of the impact of marketing in a data-driven, customized way to existing customers.
At least one funded company, Sequoia Capital-backed AgilOne, now says its “predictive marketing” technology can be used to help small business with customer retention, for example. And Adobe Marketing Cloud provides a customer-churn analysis tool.
Retention Science previously raised a $2 million seed-and-bridge round and launched its business via the Los Angeles accelerator MuckerLab.