Customer acquisition and retention often compete for funding within a company’s marketing budget. The reality is that both are essential for your campaign and require separate strategies. Here are the most important things to know:
New customers are more expensive than returning ones. This is a widely accepted fact, and this Harvard Business Review article sheds light on how big the gap might be:
“Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. It makes sense: you don’t have to spend time and resources going out and finding a new client — you just have to keep the one you have happy.”
Studies and anecdotes vary in terms of percentages, but we know that acquiring a customer is considerably more expensive than getting an existing one to return.
This illustrates the necessity of customer retention. Your business can’t afford to let customers in through one door and out the next. For long-term success, you need to foster customer loyalty.
In terms of tactics, one of the biggest differences between customer acquisition and customer retention is the type of content you share with prospects. This even changes within the sales funnel, according to HubSpot:
“When someone moves into the middle of your funnel, it means you’ve captured their attention. They know they have a problem that has to be solved, and now they’re trying to discover the best solution…. While the top of the funnel is designed to educate a prospect, this is the stage where you want to show why your solutions in particular are the best fit.”
New customers at the top of the sales funnel need general, informative content. As they continue, they require more depth, facts, and specific solutions.
Returning customers don’t need another round of entry-level content. Instead, you should let them know how they can maximize the value of your product and inform them about your industry.
Leads at top of the sales funnel require constant hand-holding. You need to get in touch with them several times over the first few days. Instead of just sending them emails, you should target them with ads, social media, and direct marketing methods.
You don’t need to get in touch with returning customers quite as much, though it’s still up to you to keep a line of communication. Ideally, they’ll sign up for your email newsletter so you can send them quality content on a monthly basis. Otherwise, you can use a CRM so your sales representatives know the optimal time to contact a customer and what each of your customer’s interests are based on past activities and purchases.
Why You Need a Customer Acquisition Strategy:
Attracting a customer requires time, patience, and energy. Each step of the sales funnel should add value and make sense. It should essentially tell a story that keeps a customer engaged.
On top of that, you need to optimize your website, landing pages, content, SEO, and social media campaign. It takes a multi-faceted approach to get a customer to go through the sales funnel.
Why You Need a Customer Retention Strategy:
Previously, we went over the value of returning customers. They require less attention, messages, and content than new ones, but still pay the same price for your product. Thus, they have a much better ROI and are essential for the long-term growth of your company.
If you can’t get customers to stay, then you need to stop the bleeding immediately. Otherwise, all the money you invest in customer acquisition will leave along with your customers.
Customer acquisition and retention require different strategies, or else you’ll share irrelevant content with prospects and existing customers. Both are essential for the long-term success of your company.
Get (and Keep) More Customers by Getting the Right Help:
Optimizing your customer acquisition and retention strategies can be a lot of work and requires a multifaceted approach–both online and offline. Most business owners don’t have the extra time or excess budget to spend experimenting on tactics that may or may work. They need a solid game plan according to their past and current customer behaviors and business objectives. They need expert guidance in crafting a strategy that can be implemented, measured and adjusted as needed.
If you’d like to learn more about what you could do now to improve your customer acquisition and retention, contact our team at McAllister Marketing today. We specialize in strategies that help our clients attract, convert and retain more customers, and we’re super easy to work with too.