Many businesses are torn on whether to invest their money in customer retention or acquisition. Customer retention involves building relationships with existing customers, while customer acquisition focuses on attaining new customers. Retention and acquisition are equally important, but in different ways.
Customer acquisition brings new customers, clients and investors to your business. A business’ acquisition strategy should be sustainable and flexible to recent consumer trends. Of course, building a customer base is essential for any business – no matter how big or small. New customers can help pay employees, reinvest in growth and make money to meet the costs of running a business. 44% of companies focus on customer acquisition, while only 18% focus on retention.
To generate new customers, businesses need to be aware of the typical consumer behavior cycle. Firstly, a consumer will gain awareness of the brand, and then they will consider the product’s value to them and finally, they will make the decision to become a paying customer.
Your marketing and customer service team should work collaboratively to market the product to new customers. Analyze your customer’s behavior and how they respond to different marketing strategies.
However, acquiring new customers actually costs five times more than retaining an existing consumer. In fact, US companies lose a whopping $136.8 billion annually on avoidable consumer switching. By increasing your customer retention by 5%, you can improve your overall profit from anywhere between 25 and 95%.
Moreover, loyal customers are five times more likely to repurchase a product from a brand they like. Invest in customer retention strategies to save yourself money and time while still growing your business. Genius!
89% of companies consider customer experience as a significant factor in generating customer loyalty. Email marketing is the most effective marketing strategy for retaining customers.
Consider setting up a loyalty program to build strong relationships with your customers and encourage them to write reviews about your service. Customer feedback can encourage new customers to buy into your business and help you to improve your product and customer service.
On average, loyal customers spend 67% more than new ones. Encourage your customers to return to your brand for their favorite products, and they are likely to spend more each time.
It should be noted that there is a difference between existing customers and loyal ones. Loyal customers will purchase services and products from your brand time after time.
To turn an existing customer into a loyal one, target your marketing strategies towards retention and reduce your spending on acquiring new customers.
Consider which marketing strategies are highly effective for your target demographic and customer base. Invest your money in smart strategies to grow your business sustainably and effectively.