Many marketers disagree over which is more important: client retention or customer acquisition. Customer acquisition is highly regarded among marketers since getting a new user is extremely fulfilling. It might be because it's satisfying to see a return on all the cash, time, and work invested in marketing initiatives.
While it's critical to attract new consumers, it's also necessary to sustain strong ties with existing clients. A good relationship has enormous power. Of course, you must continue to generate leads, but it is sometimes more profitable for your business to concentrate on retaining existing consumers.
According to an InMoment survey, 61% of buyers would make a special effort to buy from brands they trust, and 60% would make more regular purchases from those brands. It's because when customers engage with businesses and form relationships with them, they are more likely to remain loyal to them.
Understanding the differences between these two marketing approaches might assist you in determining which is most beneficial to your business. In this article, we clarify both of these terms, discuss their contrasts, and list the advantages of each so you can decide which method is ideal for you.
Defining client retention
Client retention includes the activities and measures taken by businesses and organizations to decrease customer churn. Customer retention programs are designed to assist companies in retaining as many customers as possible, generally through client and brand loyalty campaigns. It's necessary to keep in mind that customer retention starts with the first interaction with a business and extends throughout the relationship's cycle.
A solid recruiting plan, creating and instilling faith and credibility in the minds of your clients, and occasionally checking to see if they have everything they need are just a few of the essential things that help retain consumers. Understanding your consumers' needs and desires and addressing them as quickly as possible is not brain surgery. When you concentrate on customer retention, you will immediately notice an increase in customer satisfaction.
Customer retention benefits
- It's less expensive: Many business owners feel that gaining a new buyer will generate the most money. Sure, new customers bring extra cash, but the expense of obtaining a new client is costlier than retaining an existing customer.
According to Semrush statistics, the chance of selling to a new client is 5%-20%, while the chance of selling to an existing client is somewhere between 60% and 70%, owing to the fact that these shoppers already know your business.
As a result, concentrating on your existing customer relations allows you to save money and increase your earnings.
- You already have basic info about your customer: The connection begins when a customer places an order. They are familiar with your business, but you are more familiar with your customer. You know their previous purchasing habits and preferences. You can design your strategy based on what they've searched or how much money they've left. Then you can advertise your company to them specifically.
Personalization is crucial in selling to today's consumers, and the better you know your customers, the more personalized messages and experiences you can generate for them.
- You'll create brand ambassadors: People enjoy talking about their terrible and finest experiences. When customers who value your organization have pleasant feedback about your company, they will undoubtedly share it with their friends, relatives, and coworkers.
That's how your happy customers transform into brand ambassadors. They will talk around, give glowing reviews, follow you on social networks, and return for more when they require a new product or service.
How to boost customer retention
- Establish clients' expectations early and a bit lower than you can ultimately offer to remove doubt about the quality of your product/service and guarantee that you'll always follow through on your word.
- Be the clients' trustworthy ally. In order to win buyers' trust and accomplish customer loyalty, you must be a master of your business.
- Develop bonds with customers that are based on trust. You can accomplish this by strengthening consumer relationships and sharing mutual values.
- Create a systematic approach when it comes to customer service. Employ proactive service to prevent problems from arising.
- Build relationships with the help of social media. Interact and engage with clients on LinkedIn, Instagram, and Facebook, and offer them a place to share their stories with your company so they may become brand advocates.
- Put in the extra effort. By listening carefully to consumers' wants and hurdles, you can form close relationships with them and earn their long-term commitment.
- Make it unique. Personalized service enhances the user experience and is something that clients seek.
Defining customer acquisition
The process of enrolling new clientele in your company is known as customer acquisition. Customer acquisition specialists employ a variety of strategies to persuade potential consumers to engage. This procedure aims to develop a systematic, long-term plan for acquiring new buyers and increasing income for the company.
While advertising seeks to raise awareness, acquisition seeks to motivate people into action. Suppose you're running a Facebook ad to reach your target audience. You can monitor how many users have liked your ad, responded to it, and so on to see if your effort is paying off. That's how marketing works. However, acquisition refers to what happens when potential clients see your website or get your emails. Acquisition occurs when people are willing to react by ordering your goods or services. Marketing provides visibility, whereas acquisition generates income, and they are often inseparable.
Your company will no doubt grow as it acquires new customers, however, you also need to weigh customer acquisition costs against the value of customers over the long-term.
Customer acquisition benefits
- Increases brand awareness: One of the most obvious reasons companies advertise is to raise brand recognition. If your brand is well-known in one place, you will take the opportunity to expand it to another. The marketing efforts help your brand enter new markets, resulting in increased earnings. Brand awareness empowers your company to join a new marketplace, boost sales, raise brand reputation within the target market, and collect audience data.
- It helps you afloat: Your business will lose customers at some point. Either they move to your opponent, don't require your product/service anymore, or pass away. To protect yourself from such threats, you have to work on attracting new consumers in order to maintain a balance between existing and gone clients. When your company fails to recruit new consumers, it loses money and finally goes out of business. Constantly seeking new clients will help your company remain profitable, even if some clients leave or pass on.
- It brings food to the table: The primary goal of attracting new customers is to boost sales, and the drive for revenue is the cause for so many advertisements and marketing efforts. Having a company that does not make money is similar to managing a non-profit organization, and that's not why most people started a business.
Adding new clients raises sales, which enhances profit margins. When you gain new clients, you gain their buying power as well. As a result, your margins will increase after the new acquisition if you were making lower profits before their introduction.
How to boost customer acquisition
- Broaden your approach. Developing your client acquisition strategy and introducing new channels establishes a risk-reward balance, making it easy to shift resources to a best-performing channel if others fail.
- Leverage video content. People usually successfully process new information through visuals, and videos are one of the most effective ways to educate potential customers about your business and products. Strive to strike a balance between educational and entertaining videos. Use influencers to create these videos, which you can then distribute on social media and your website.
- Sometimes, words and claims are not enough to persuade someone to purchase your goods/services. Influencer or word-of-mouth promotion won't convince some of the most persistent customers. To lure these prospects, try giveaways. Giving customers the opportunity to try out your items directly is a terrific approach to provide them with that extra incentive they need to see you as a viable choice.
- Optimize your landing page. Adjusting your landing pages is undoubtedly one of the most efficient client acquisition tactics. Landing pages assist customers in finding your product or service. A successful landing page provides useful information and features an appealing CTA that drives conversions.
- Concentrate on SEO. Optimizing search rankings and market presence plays a significant role in the initial phase of client acquisition. Applying industry-related keywords, backlinks from authoritative websites, etc., are just a few examples of standard SEO techniques.
Every organization will have somewhat unique requirements for customer acquisition and retention. Startup companies have no other option but to invest in new clients because they do not yet have a client base to focus on. On the other hand, a company that already has a devoted following and a large number of satisfied customers will gain from a customer retention strategy. For most businesses, it is a matter of striking a balance between how much money is spent on attracting new customers and how much is spent on nurturing the old ones - because both are critical to success.