Customer Acquisition vs. Customer Retention 

What's the difference?

Customer acquisition and retention aren’t new concepts, but surprisingly, a lot of people aren’t aware of the differences between them. Customer acquisition focuses on attracting new customers through marketing and sales techniques, while retention involves maintaining the business of existing customers, often relying more on individual Account Managers.

Why Prioritise Customer Acquisition? 

Increase brand awareness 
One benefit to prioritising customer acquisition is increased brand awareness. Brand awareness is how well your customers know your brand and its message. Being the first choice for customers because of your shared principles is especially beneficial as it creates a personal connection. Enhancing your brand awareness strengthens the relationship between you and your customers allowing you to build trust. Simply displaying brand values openly is attractive to many consumers – 79% saying they’re more likely to buy from brands with the same values as them! 

More customers, more income 
The main advantage of customer acquisition is an increase in customers leading to more revenue. In turn your business will see more active customers and potentially new customers becoming repeat spenders. A crucial factor is that having more customers, leads to increased word-of-mouth marketing for your business. According to the Ogilvy Cannes study, 74% of consumers consider word-of-mouth a key influencer in their purchasing decisions.

Why Prioritise Customer Retention? 

Add value to your customer base 
Focusing on customer retention can help you increase your CLTV (Customer Lifetime Value). By prioritising customers who contribute the most to your business you can create a loyal and stable customer base, maximising return business. This valuable customer base generates more income, enabling you to invest in targeted marketing campaigns and more expensive acquisition efforts.

Reduce customer churn 
Your churn rate is the number of customers that stop doing business with you over a certain time period. Reducing customer churn means that the money you spend on Sales and Marketing techniques isn’t being wasted. Prioritising your existing customer base will guarantee that you’re not running in second place. According to Zendesk’s Trend Report, half of consumers will switch to a competitor after just one bad customer experience!

Why You Should Focus on Both

As you can see, acquisition and retention serve distinct purposes. One without the other leaves your business underperforming and stunts business growth potential. In the short term, acquisition is always required to bring in new business. But for long term growth, retention will add more value to your business overall. To avoid stagnation and improve your company – utilise both acquisition and retention together. 

The Growth Formula

To achieve growth in both acquisition and retention, many companies can struggle to strike a healthy balance. Using the Growth Formula and our Playbook you can form a solid foundation for sales growth.

The growth formula is simple, but it's often overlooked. Driving customer acquisition using our Funnel whilst focusing on CLTV with our Flywheel provides the perfect basis for smashing your long-term sales goals.

The Growth Playbook puts this into a variety of actionable tasks. Focusing on both acquisition and retention, each tile of the playbook gives you a goal for your growth in a different category.