Want Your Business to Make More Money? Stop Acquiring Customers!

That’s right, stop acquiring customers right now. For years, marketers have focused their time, energy and budgets on acquiring new customers. However, research has shown that it is five times more expensive to acquire a new customer than to keep an existing one[2], so why do so many marketers continue to focus on acquisition?


The reason is simple: It’s easier (and quicker) to show the ROI of acquisition. One can easily look at the amount spent on acquisition efforts like SEO, PPC, digital ads, etc. versus the number of new customers gained. While it’s true a business can’t grow without new customers, marketers who spend all their time, energy and budget on acquisition find themselves stuck in a vicious cycle of maximum effort with minimum output. This is why marketers need to stop focusing on acquisition and start focusing on retention.

Research produced by Harvard Business School states that increasing customer retention rates by just 5% increases a business’s profits by 25-95%[1]. These numbers underscore the how valuable your existing customer base is versus new customers.


Acquisition Marketing vs Retention Marketing

So what makes retention so effective? First, let’s look at the differences between acquisition and retention marketing:

Acquisition Marketing

Acquisition marketing covers everything a business may do to gain new customers. This includes advertisements, SEO, PPC, events, partnerships, and any other type of marketing that is used to grow your business.

Retention Marketing

Retention marketing is what a company does to keep the customers it already has engaged and interested in its products. Retention Marketing is usually achieved through loyalty programs, email campaigns, lifecycle marketing campaigns among other activities.

Why retention marketing is important

You may find yourself asking: If someone is already my customer, why should I spend extra time trying to keep them engaged — isn’t the fact that they’re a customer proof enough that I’ve done my job? Unfortunately, it’s more complicated than that.

With customer choice reaching an all-time high while customer attention spans dipping to an all-time low, getting someone to engage with your brand just one time is no longer enough. Customers are demanding engaging and personalized experiences with your brand that fit into their life, not the other way around. This is where retention marketing can really shine. Sending customers emails that have promotions specifically for each individual, making sure not to contact them when they’re least likely to want to engage with you, or knowing when someone is about to churn and enticing them back with the right offer are just a few examples of what brands who focus on retention marketing are doing to improve their relationships with their customers.


Gartner Group shows that the Pareto Principle is true: 80% of your future sales come from 20% of your customers. Looking at the data, it’s easy to see why this is true. The probability of selling to an existing customer is 60-70% while a new prospect is only 5-20%{2]. Not only are they easier to sell to, existing customers are also more likely to try new products from your brand (50% more likely) and will spend more money with you — spending 31% more than new customers![2].

Retention marketing strategies

There’s no question retention marketing is essential to your business, but how can it be integrated into your digital marketing strategy? Here are three things you can change to add retention marketing to your strategy:

1) Redefine how you measure customer value

Instead placing focusing on how much it costs to acquire a customer, companies need to start looking at the customer lifetime value (CLV) of each customer to get a view of potential net profit of each person during the amount of time they are engaged with their brand. This information is useful when segmenting customers, suggesting various products, and offering promotions or discounts.

2) Make investments in data-driven technology

It used to be that only the big companies like Amazon could afford to leverage the types of big data that is needed to truly communicate with customers on an individual, personal level. Luckily, this is no longer the case. Many companies are using third-party vendors to help them collect and analyze data on their customers. Companies who are willing to invest in the technology and resources that are able to help them better gather and analyze customers will not only see results, but solid ROI as well.

3) Restructure priorities

As mentioned, acquisition is where a majority of businesses spend their marketing dollars because it is easy to measure and see results quickly. Switching focus to retention marketing means getting upper management on board with decreasing (sometimes significantly decreasing) the amount spent on acquisition and increasing the amount spent on retention and it can be an uphill battle. The emphasis really needs to be on the importance of retention marketing, what it can do for your brand, and what kinds of investments you’ll need to make (both in technology and personnel).

Retention marketing is the future

By now, it should be easy to see why retention marketing is so important and why it should start to be equal to or overtake your acquisition efforts. We’re not saying you should completely abandon customer acquisition all together. Of course you will always need to try to get new customers in order to grow, just remember: you’ve worked hard to acquire these customers, make the effort to keep them engaged and interested to see the full payoff of your investment.



[1] www.helpscout.net

[2] www.getelastic.com


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