The Retention Flywheel

The 4-step flywheel behind sustainable businesses.

Author

Pietro Saccomani
September 04, 2025

Most brands pour all their energy into acquisition.

You need new customers, yes. But growth built only on first-order profits is a hamster wheel.

When you stop spending, it stops spinning.

To be successful, and sustainable, you want a flywheel — growth that compounds and drives profit you can reinvest.

Sustainable Brands Are Built Retention-First

Acquisition is a tax. 

Paid media and landed costs are up; margins are tight.

You can’t cut your way to durable growth. Brands that last understand: growth doesn’t just come from more customers. It comes from more customers coming back.

Think 80/20: a small slice of customers usually drives most of your profit. Your job isn’t just to acquire — it’s to acquire the right customers, help them get value, give them an easy next step, and repeat the cycle to grow your business.

That’s the Retention Flywheel:

Acquire → Engage → Retain → Repeat.

Each step feeds the next. Do it well, and you build a business that’s sustainable, compounding, and profitable.

Step 1: Acquisition (get high-value customers in the door)

Acquisition has two jobs:

  1. Keep you alive: Profit on first order, or payback within 60–90 days.

  2. Set up retention: Favor products/offers with a natural repeat path (starter kits, bundles, replenishable SKUs) over discount-driven one-offs.

The second part is where many businesses trip up.

They chase cheap conversions instead of profitable ones.

And the most profitable conversions are those that lead to multiple purchases over the customer’s lifetime — not just a one-off.

So, don’t stop advertising on Meta and don’t ignore the need for short-term profitability, but build your acquisition funnels with a view to the long-term:

  • Focus spend on segments/SKUs that actually reorder.

  • Use offer structure (bundles, thresholds) to lift AOV and set up the next purchase.

  • Don’t scale media until basics are on: welcome flow, cart recovery, and a post-purchase path.

Done right, every dollar buys not one order, but several.

Step 2: Engagement (turn buyers into users)

The conversion isn’t the real win — usage is.

Does your customer actually use and enjoy the product? Because if they don’t, there’s no chance they’ll come back.

Start thinking of the customer lifecycle like we do in software. A SaaS company doesn’t celebrate when someone signs up for a trial, or signs up for the first month’s subscription — they celebrate when the customer hits their “aha” moment and sees value.

Your job is to help a buyer become a user:

Onboarding: Show them how to use what they bought and get value. This could be a simple guide, a quick-start video, or even just a few well-timed emails.

See how Airwaav does it — fitting, usage and implementation guides that guide new customers towards value.

Post-purchase experience: A smooth delivery, proactive communication, and clear return/exchange options build trust. It also improves the chances that the customer will come back again (a frustrating post-purchase experience does the opposite).

Don’t ignore returns, too. Like Sabrina shared on our pod, too many brands make this difficult for customers, which destroys any chance of bringing them back to buy again.

Early advocacy: This is where you plant seeds for loyalty — invite them to share UGC, leave a review, or join your community.

Not everyone will do it, but those who do are likely to become your power users, paying back 10x their acquisition spend.

Step 3: Retention (the second purchase milestone)

The second purchase is usually the turning point. Get a customer to order again, and the odds of them becoming a long-term buyer go way up.

Retention looks a little different depending on your category, but the principle is the same: build your retention messaging around a natural second purchase window.

  • Consumables: Hit the consumption window (e.g., day 21–24 of a 30-day supply).

  • Subscriptions: Reduce friction with skip/swap/snooze; rigid terms backfire.

  • Non-consumables: Offer the logical follow-up (complement, replacement, or variety).

Beyond products, retention is also about building a deeper connection:

  • Loyalty programs that reward behavior

  • App downloads that create stickier touchpoints

  • SMS/email updates that keep your brand present without being annoying.

Steps 2 and 3 are where you should spend the majority of your focus. It’ll make your acquisition spend look a lot better if your customers regularly use and enjoy your products, and come back to buy multiple times.

Step 4: Repeat (build the compounding engine)

Every repeat order does two things:

  1. Expands margin. You’re no longer paying CAC — every extra purchase has more profit baked in.

  2. Frees up cash. Those profits can be reinvested into acquiring new customers, fueling the front of the flywheel.

Your job is to keep the flywheel spinning. By definition, a flywheel runs on its own — but you can work to remove friction points that might block it, and encourage more customers to jump on the flywheel who have previously fallen off.

  • VIPs: Give insider treatment and early access for power buyers. Make it feel good to be a repeat buyer, and turn these power buyers into advocates.

  • Winbacks: For lapsed customers, run 60/90/180-day flows with a clear hook (“What’s new since your last order”).

  • Relentless CX: Don’t sit back and think the job is done. Keep improving shipping, service, product quality, filling gaps and finding ways to make your flywheel more effective.

This is where profit compounds: best customers buy more, stay longer, and bring friends.

The profit that comes from repeat buyers is what funds your next wave of customers (and potential VIPs).

Final Thoughts

Growth used to mean throwing money at ads and hoping first-order profits covered it. That game is over. CAC is higher, competition is tougher, and margins are thinner.

The brands that win now are retention-first: Acquire fast, engage early, earn the second purchase, and repeat.

Profit isn’t the outcome of growth. Profit is growth.

Acquire → Engage → Retain → Repeat. Keep it that simple.

Quick Hits

American Shoppers Stockpiling Ahead of Tariffs

This piece from Retail Brew shows nearly a third of US shoppers have been stockpiling ahead of potential price increases.

With tariffs still looming in the distance, a large number of shoppers have been using Labor Day sales as an opportunity to stock up before prices rise.

Shoppers Trust AI More than Brand Websites

This is interesting. Data from Accenture finds that shoppers are nearly twice as likely to trust product recommendations from generative AI than those from a brand’s website.

Brands that embrace and ace AI-native shopping are about to see a major boost in the coming years.

Shopping: Pre & Post-Internet

a16z is one of many betting on AI-native shopping becoming the norm.

They put together this great thread breaking down how shopping habits changed before and after the internet, and similar changes to expect with AI commerce.

AppLovin Opening Up for New Advertisers

Just in time for BFCM, AppLovin’s ad platform is about to start accepting new advertisers. There’s also a rebrand, removal of GMV limits, and ad spend credits for qualified brands.

Amazon Prime Signups Slower than Expected

Despite doubling the length of Prime Day this year (to four days), Amazon’s Prime subscriber signups lagged below last year’s numbers and this year’s target.

Not exactly cause for alarm — as the ecom giant still added 5.4 million new US signups over that period.

Amazon Restarts Non-US Google Shopping Ads

One month after pausing all their Google Shopping Ads, Amazon has restarted all their campaigns — for international domains only.

The pause may have been a deliberate test of their reliance on traffic from Google, but it’s interesting to note that these ads still haven’t restarted for the US.

Shoppers’ Orders Cancelled Ahead of De Minimis Ending

A number of countries, including Canada, the UK, Australia and Mexico, have been suspending package deliveries to the US ahead of the end of the de minimis exception.

This includes warnings from major marketplaces like Etsy and eBay to customers, that delays can be expected, alternative shipping options required, and that some orders may be cancelled.

That’s all for this week.

I’ll be back soon with more on how successful brands are doing CX and retention right.

We’ve also got a killer resource coming that will help you ace Black Friday this year — and turn the momentum from the year’s biggest shopping event into long-term gains.

Until next time,

Pietro and The Retention Edge Team

PS: want to boost retention, revenue and profitability? If so, launching your own app could be the best move you make this year.

See how: go to our website to get a preview of your app for free, or shoot me a DM on LinkedIn to talk about it.