Retention, not Acquisition, is key to customer success
For decades retention marketing was passed over in favor of traditional acquisition efforts, but today the wide consensus is that retention, not acquisition, is king when it comes to customer success and company profitability. Acquisition marketing refers to the process of attracting additional customers, while retention marketing focuses on keeping customers engaged in the products or services a company offers. While these basic tenets of marketing have always been the same, the push surrounding higher customer expectations has shifted retention marketing, customisation, and customer success into the spotlight.
In the past, companies allocated most of their budgets to acquisition efforts and relegated retention marketing to a dusty corner filled with loyalty programs, discounts, or generic campaigns. A Forbes article refers to this as “the one size fits all” approach to marketing, in that all customers were offered the same retention perks while acquisition remained the company’s strategic focus. However, as more and more companies are realising that their customer retention marketing is sub-par, they’re searching for innovative ways to move into the future of customer success.
Now studies are showing that it costs five times more to attract a new customer than to simply retain a current one. That’s because, in part, existing customers are 50 percent more likely to try new products and spend 31 percent more on average than new customers. In fact, if a company increases its customer retention rate by just 5 percent, they can increase profits anywhere from 25–95 percent.According to Gartner Group, 80 percent of a company’s future revenue will come from 20 percent of its existing customers. And the Forbes article noted above found that if online retailers retained just 10 percent of their existing customers, they would double their revenue stream.
