Back when lions used to smoke, marketers would mainly focus on customer acquisition.
That’s because acquisition boosts vanity metrics such as page visits, more daily active users, etc. But as marketing evolved, it was made clear that retention has a much greater ROI.
In fact, it’s 7 times more expensive to acquire a new customer than to retain an existing one.
Knowing that…
Should you focus more on customer acquisition or customer retention?
Believe it or not, you can grow with the best of both worlds and we’ll show you how in a minute.
First things first ?
ACQUISITION provides you with the opportunity to serve more people.
RETENTION helps increase customer lifetime value. Loyal customers are obviously more valuable than one-time buyers. Research also shows that a 5% increase in customer retention can boost your overall revenue by up to 95%.
Now let’s take an Olympic dive into how marketers can balance acquisition and retention:
1. Create a customer journey map
A customer journey map is a very simple idea: a diagram that illustrates the steps your customers go through in engaging with your company, whether it be a product, an online experience, retail experience, or a service.
This will allow you to identify gaps in pre-purchase and post-purchase communications.
So the goal here is to make every customer experience feel exceptional, regardless of whether they’re an existing customer or a prospect.
Seriously think about it, how can you know what to focus on if you don’t even understand how your customers behave and feel at specific steps of their journey?
Customer journey mapping is especially helpful for small businesses that are competing against giants.
FYI, our digital marketing consultants can audit your customer journey map and suggest changes! Contact us today for more information.
2. Leverage email marketing
Marketing automation allows you to concentrate on acquisition efforts while delighting your existing customers.
And this can be done easily since you’ve already filled the customer experience gaps thanks to the customer journey mapping exercise.
A well thought out email marketing strategy can work wonders for customer retention. In fact, 80% of business professionals believe that email marketing increases customer retention.
Another great way to balance both acquisition and retention is to use social media to acquire new customers and focused email marketing to retain the existing ones.
Here are a few key elements to think about for your retention email strategy ?
- Personalize as much as possible
- Remind them what problem you solve and how well you do it (This can also decrease buyer’s remorse)
- Show them specific product testimonials to cross-sell or up-sell
- Once in a while, send an ‘’education email’’. These are used to educate the reader on a topic that they’re interested in.
- Send referral emails. 1000 true fans will spread the word. Referral emails kill two birds with one stone. It engages your members while leveraging their customer loyalty to attract new members.
3. Focus on the right channels
Here are the channels used to acquire new customers:
- Organic search
- Direct traffic
- Email marketing
- Referrals
- Paid search
- Social media
- Paid social
- Events
- Word-of-mouth marketing
- Direct mail
- Cold outreach
Here are the channels used to retain existing customers:
- Email marketing
- Push notifications
- Re-targeted advertising
- Personalized letter
So what is the perfect balance?
Chances are, your resources won’t allow you to strike the perfect balance between retention and acquisition but you can come pretty close after auditing your customer journey.
The more you gather valuable data, the more accurately you’ll be able to allocate your strategic focus in the future.
Here are some best practices to help you retain existing customers:
- Stay in touch with them on a regular basis through the channels that they prefer, including email, social media, direct mail, or personal follow-up.
- Engage them with surveys that allow them to genuinely and confidentially give you feedback.
- Offer them something special every once in a while: a discount, a coupon, an invitation to an event, or something else that they will appreciate. Unexpected and thoughtful gestures go a long way.
- Say thank you. Everyone appreciates that.
- Train anyone who has direct contact with your customers. They must be able to make the customer experience exceptional every step of the way, even during difficult interactions.
The great news is that most of these examples can be automated!
To learn more about balancing acquisition and retention resources, read this research article.