Which is Better: Customer Retention Marketing or Customer Acquisition?
There is no doubt that customers are considered to be the lifeblood of any business. Whether you are running an e-commerce website or manning a brick and mortar shop, your customers will bring in some much-needed revenues in order for you to gain profits, as well as have the ability to grow your business.
That being said, a lot of entrepreneurs focus their attention solely on acquiring as many new customers as possible. Actually, that is not wrong, per se, as it is actually needed by any business to garner new customers.
However, focusing your efforts solely on acquiring new customers is not the way to go, especially if you think about gaining as many profits as possible.
You see, 65% of your total revenues will actually come from your existing customer base. That is not made up; that is actually considered as fact.
Today, I am going to talk about whether which is better: customer acquisition or customer retention?
What is Customer Acquisition?
Customer acquisition is a set of strategies employed by business owners to ensure that they are getting as many new customers as possible. Either they make sure that they employ good SEO strategies to help drive new and more traffic to their websites, or they do some promotions via ads to help entice people to go to their shop.
What is Customer Retention?
On the other hand, customer retention revolves around using certain strategies that will help nurture your business’ existing customers to encourage them to buy even more products over time.
As mentioned earlier, the bulk of your profits will actually come from your existing customers and not from your new ones.
So, Which is Better?
Hands down, the clear winner here is customer retention and I am going to explain why. According to market research, customer acquisition is actually 5 times more expensive to implement than nurturing your existing customers.
Although you can get profits by getting new customers, some of them will actually not visit your store anymore. In fact, the success rate of getting more profits this way is actually only 60% (which is a considerably lower rate).
Customer retention is actually so much better due to a variety of different reasons, such as:
- Better Customer Service- People will not hesitate to spend their money on a company that always have a high regard for good customer service. And guess what, this strategy falls under the umbrella of customer retention marketing.
- Keeping in Touch- A lot of people want it whenever a company keeps in touch with them. Creating a personal connection actually breeds trust and a much stronger relationship with the client.
- Promotion in and of itself- People want to be treated as people and your customers are, well, people. In order for you to retain as many of your existing customers as possible, you have to make sure that you keep their satisfaction high. If they are happy with the service and products that you have provided, they will promote your business to their friends and family, thus allowing you to acquire more customers just by nurturing your existing ones.