Customer Acquisition vs Customer Retention
This post was first published in 2017
When you first start out everything is about gaining new customers and getting the business off the ground. Money is primarily spent on advertisement, promotions and sales incentives to get the brand name out and customers to spend. What happens though when you have accumulated a healthy pool of clients? Do you shift your focus from acquisition to retention?
Ideally, the answer should be yes. All businesses should have a retention strategy in place but unfortunately that is not always the case. There are plenty of reports out there showcasing that ROI is much better when part of the marketing budget is spent on retention rather than only on acquisition.
So why is it that we as customers do not get rewarded for our loyalty? Maybe even more importantly, why do we as customers accept that new customers get the big discounts, free membership trials and welcome gifts? Can you remember the last time you requested to receive the same? Honestly, even I who is banging on about customer retention cannot remember the last time I asked to receive the same benefits.
Personally, I believe that customers will start demanding to be treated the same way as newly acquired clients and will therefore force companies to rethink their spending policies in regards to acquisition versus retention. The big market players have already started to refocus their marketing efforts. Just think about the tailored shopping vouchers you receive from the various supermarket chains. Less than 10 years ago, supermarket chains did not fight as hard to get us back because competition was less fierce.
I am not saying that you should start using discount offers but instead to look at your existing customers and have a think about how you could reduce customer attrition. And when you sit down next with your marketing department and develop a plan and a budget, make sure to not only include strategies but also money which focuses on your existing customers.
