What Is More Important: Retaining Customers Or Acquiring Customers for your business

What Is More Important: Retaining Customers Or Acquiring Customers

For years marketers faced the same problem; how to spend my marketing budget?” in respect to getting leads and conversion. Spending a marketing budget with confidence is always a challenge because the growth of the business is dependent on your marketing endeavours.

However, marketers should ask the most vital question of all, and that is- do we invest money in retaining customers or acquiring new customers?

To retain or to acquire?

Your customers are the spine of the business. Particularly in this digital age of the smartphones and mobile devices, where alternative services are available at the swipe of a finger. So to get a better insight to the retain-or-acquire conundrum, let’s look at some trends and current practices:

Most businesses don’t value their current customers as much as new customers. This is a massive problem that is prevalent across most industries today as relationship marketing is highly neglected. Below are some statistics from e-consultancy marketing report 2013:

• 30% of companies are committed to relationship marketing

• 46% of companies are committed partially to relationship marketing

• 22% do not participate in any type of relationship marketing

Costs and ROI

Growth and profit is all about bottom lines, and one of the most costly and tough tasks for any business is acquiring new clients.

Getting new leads, making a conclusive pitch, and then converting this to a sale can be expensive when you consider all the steps involved. And because of the costs involved and the return on investment, marketing becomes overrated when you consider the expenses of a marketing campaign; especially when the customers are not repeat customers. If your business model is one that does not need repeat patrons, then stick with the “Acquire” model, but if like most businesses you offer repeat services, then “Retention” should take a chunk of your marketing budget.

Almost all companies create a marketing budget and this is necessary, but it is astonishing to see a collective disregard of retention that seems to be pushing companies farther from their existing customers and, instead, channeling their energy, time and money to acquiring new customers.

My Verdict

If your start-up period is long gone, and your company is established, growing your business will be effective using the retention model, because if you retain your existing client base you will get repeat business and word of mouth publicity. Fact is while retaining customers, most companies utilize methods like loyalty and rewards systems and these methods have been known to draw in new customers without much effort. So in truth, when retaining customers, you will be killing the proverbial bird with one stone because the cost of retention will also work to acquire new customers.

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