Acquisition vs Retention: Ultimate Guide To Keep Customers

in: Digital marketing

    Narmina Balabayli June 19, 2020

customer retention vs acquisition

An organization becomes successful when it gives a high level of attention to a customer’s needs, and the customer finds trust in their services. A healthy relationship between an organization and its customer is an essential parameter that should never be neglected. 

You will be amazed to know that an average company annually loses over 20% of the customers because of low customer engagement. Therefore, to have sustainable growth, it is important to maintain a good relationship with all your customers. This article discusses some of the best strategies to help you retain your customers, which leads to better growth of the organization.

You might also like: 6 Creative ways to engage your customers.

Why Is Customer Acquisition Not Enough?

Acquiring new customers is important for every company regardless of its scale and age. More customers essentially mean more business and better opportunities. However, most companies make a common mistake of running behind acquiring new customers without keeping track of how well they are catering to the needs of their current customer base. Customer acquisition alone is not enough when you want your business to scale up.

What Is The Benefit Of Keeping Customers?

In the long run, it affects the organization in a very big way. Customer retention becomes hard without keeping up with the customer requirements as other competitive services always try to steal your customers with new and more advanced strategies. Therefore, customer retention in your current database is a step that you must take into account.

Retaining current customers helps in:

Profits come from winning new customers, but mostly from retaining old customers. According to Marketing Metrics data published in 2020, the successful sales rate for new customers is only 5-20%, while this rate for existing ones is 60-70%.

Needless to say, businesses are well aware that obtaining new buyers in today’s competitive environment is very challenging. So it’s better to hold dear to the ones that have already purchased from you.

A study by Harvard Business School points out that an increase of 5% in retention rate generates 25-95% in profits for your company.

customer retention vs acquisition
Source: Harvard Business School

That said, get-back-customers tactics are vital for developing a sustainable business.

What’s The Best Time To Focus On Customer Retention?

Although there is no specific answer to the question, it depends upon many insights into the current working of the organization. However, the two parameters that determine the best time to focus on customer retention are:

1.The Lifespan of the Product

The fundamentals of the customer retention policy will be most influenced by the nature of the product that you are selling. No two businesses can run in the same way, and the demand in the market for the products vary according to the different industries. 

If your product has a high value that does not have a regular demand, you need to focus more on customer acquisition. In that case, you can create a flexible customer retention policy that will spend limited resources on retaining the customers.    

2.The Maturity of Your Business

The maturity of your business will determine how big your customer database has become. If you have just started a company, then the main aim should be to increase your customers. When your organization reaches a certain level of recognition in the market, the need for customer retention then arises.  

However, you should always implement certain strategies such as automated email workflow, welcome emails, post-purchase emails that help in giving a better service to your customers. This becomes a useful way over time in retaining the customers. 

customer retention vs acquisition
Source: Shopify

As your business becomes more established, more work and attention you need to put on the retention strategies. Retaining the acquired customers is a significant process for the development of business.   

The primary aim of the customer retention programs is to implement the techniques that will help to retain the maximum number of your business customers. So, it is essential to first provide that you provide the best service to every customer that you acquire so that they wishfully choose your service over others.

Strategies To Keep Your Customers For Forever

No organization can afford to lose customers. So, it is important that once customers give trust to your organization by purchasing your product or service, you should do everything possible to provide them the best service. 

This will not only help them stay engaged with your brand, but they will also encourage others to choose your service. Below are given 10 golden customer retention strategies that will help you to keep the maximum customers. 

#1 Define And Highlight Your Values

What Does Your Business Stand For?

An intriguing study by Havas Group shows that 77% of customers will prioritize buying from the companies that “share their values”. This number is even higher for younger customers, 84% of millennials ask for the same value system when making a purchase (according to Meaningful Brands, 2019).

If your business does not stand for certain values, you will likely be left far behind. Defining business core values ​​has never been an easy matter. If your business has not yet taken sides, you are better off in a hurry. 

Give a profound thought about current values and decide which values would bring a strong reliable relationship with customers. Some food for thought could be feminism, mental health issues, creativity, green lifestyle, environmental subjects, and advanced technology dynamism.

Does Your Product Bring Value To Your Customers?

Customers have no longer bought a product for the mere use of it. ‘You are what you use’ is the belief of modern shoppers. Products are now required to express customers’ value, style, personal taste, and much more. A big question businesses need to tackle is whether your product helps customers represent their values.

#2 Deliver what exactly your customers need

Speed Is Number 2, Quality Is Number 1! If you trade quality for speed, you are betting on a losing game. Time to market is necessary but the quality is even more important. 

A study from Gallup shows that courteous, willing, and helpful services and products will retain and engage customers. The number of customers sticking with a company because of quality service is 9 times higher than the number of speed-purchasers. And “speed service” is only an extra. 

The product quality of course greatly influences the purchasing decisions. The better the quality, the more loyal buyers, even if the price fluctuates.

customer retention vs acquisition
Source: Strategic Customer Service

That means you can sell high-quality products for a bit more expensive price, customers will fall for an alternative merely because of slightly higher cost as shown in the graph above.

#3 Pull Ahead Of Your Competition And Let Your Customers Know

One of the best ways to retain your customers is by being ahead of your competitors and providing top-notch services to your customers. The foremost step is to stay updated with the current trends and competitive services in the market. 

At all times, you have to develop better services and products that are beneficial for the customers. Also, your customers must be aware of every new service launched by your company.

This will ensure that they do not turn over to some other brands and always pick your product as their first choice. You can use messaging and email services to let the customer know about the launch of your new product and services.

Source: Hubspot

For instance, Amazon always keeps track of the products that you buy and accordingly, keeps you updated with new products that are launching in that business niche. Amazon will notify its users through emails and messages.

Also, they have an Amazon prime membership plan that offers the members many benefits, such as free and fast deliveries, and better deals. This makes the user see their long time benefit, and they prefer sticking to the company.  

#4 Reward Your Loyal Advocates Via Referrals, Gamification, Loyalty Programs

An effective way to retain the customers is by bringing in various user benefit programs like referrals, discount coupons, and loyalty programs. They inspire customers to increase the usage of your products. 

When a customer gets reward points or value-added offers with a product, they keep coming back to avail the services. These days digital marketing is the most prominent way of making your product reach the targeted audience. 

Gamification is a process in which small attractive games are generated and linked with offers and coupons of your products. The customer gets an entertainment source with additional coupons that makes them stay engaged with your brand and products. 

Say Thanks To Those Who Recommend Your Product Or Service To Others. 

The power of referrals is undeniable. Don’t let your customers miss opportunities to give user-generated content. Encourage them to recommend your products! 

If they suggest your product to a new customer, let them know that you are grateful for the referral. Perhaps you should do more than a thank you because 20-50% of referrals will result in a successful sale as announced on Hubspot.

It would be even better if you had a referral policy. This is a win-win relationship, you have new customers, your existing ones also have a bigger motivation to buy from you again. Businesses can use their VIP services as a reward for referrals to provide a high-end service experience. Many customers want to stick with the premium after the trial ends. Some referral successful examples that have used this policy are Dropbox or Evernote. 

Dropbox is a well-known online storage solution. It started a referral program in which they offered free 500MB space for referred and advocate accounts. The method worked miraculously for them, raising their sign-ups by a significant number.

Source: Dropbox referral page

Surprise And Delight Customers With Excellent Services And Support

A small surprise has the power to transform the day of a person. One may forget any other offers with time, but a surprise always stays in the heart of an individual. By surprising your customers with excellent services and support or a free gift, you will not only earn their appreciation but will, more importantly, get their loyalty for you. 

You may categorize different customers depending upon their past purchases with your brand. And then surprise them with gifts and coupons for that particular range. Some of the wonderful surprise ideas are:

  • Offering extra discounts to the most loyal customers.
  • Giving holiday cards to the highest paying shoppers. 
  • Working on the complaints that have the highest frequency. 
  • Sending them personalized video messages
  • Posting the customer pictures on your social media to give them a feel of a little stardom
  • Making regular meets for the customers and celebrity brand ambassadors.
  • Giving surprise with cash prizes
  • Providing them with gift cards on their birthday.
customer retention vs acquisition
Source: Loyalty

InterContinental Hotels Group sends a free $100 Amazon gift card for the customers who have availed their services as a return gift. They also have many other reward programs that give the customers many value-added benefits on choosing particular membership schemes.  

#5 Leverage Personalized Follow-ups For Engagements

An effective way to hike up your sales and retain your business customers is to provide individual attention to the customers. Everyone loves when treated special regardless how small it may be.

The trends of modern-day shopping are changing, and you must stay in line with them. Now the customers have high expectations from the brands they follow, let it be in providing more innovative products, or providing better services. For every missed opportunity, a competitor is just staying behind, providing them a better offer. 

The first thing is to personalize your email and notification campaigns to make the engagement more inclusive with the user.

Today, almost every customer links their account with their phone numbers. Use the messaging service to reach out and ask about the experience of using products like Amazon or any other eCommerce websites or store does when you buy a product from them.

You can make the engagement more appealing by converting it into a quiz form. A follow-up done with the right intent will be extremely helpful in making the customer appreciate your efforts and stay loyal to your brand.

Many brands are choosing Twitter to get in touch with their customers to show their appreciation for the customer.

customer retention vs acquisition
Source: Hubspot

Tesco, a popular grocery store brand in the UK, interacts with its customers regularly by replying to their comments on Twitter and other social media platforms. 

You might also like: How To Improve Customer Experience?

#6 Share Your Work Update Product Releases And New Products And Features

Selling is the continuous process of communicating and conveying messages to customers. Your team has worked hard to update the products, but do customers know about this commitment? That’s why you need to notify them about those changes, take the opportunity to share with existing users and potential users the engagement and dedication that you put into your goods. New feature guides or useful updates will surely be well received.

Using notifications about new products and features can help you stay connected effectively to your customers. With the diversity of communication channels, it is not difficult to bring information to consumers. You can refer to some successful examples of using updates and new product releases as a strategy to attract new buyers’ attention and retain existing ones. Telling customers about new features or new products will lead to a significant increase in the company’s profit.

customer retention vs acquisition
Source: CX Solutions repurchase or recommend increase due to telling your customers about new products or service

Data provided by CX Solutions indicates an average 30% increase in repurchase rates and referrals if former customers receive information about new products or services.

#7 Deliver Surprise Reciprocity, Be Nice To Customers

Haven’t you heard of “The Rule of Reciprocation“? What about “People behave the way they are treated”?  To put it simply, when you receive a favor, you will feel compelled to repay it.

This rule applies to business, too. Your customers pay back more than what they receive. Therefore, by being nice and treating your customers wholeheartedly, you’ll be thrilled by what you get in return.

customer retention vs acquisition
Source: CX Solutions

Now, how to treat customers well? That is customer care we are talking about, excellent customer service throughout user experience will increase the rate of repurchase and recommendation by up to 32%.

Little Gifts Never Hurt Nobody

Giving out gifts and discounts can generate prompt excitement and attention from customers, but…

Is that the right scheme in the long term? 

Instead, you should consider petite but meaningful actions. Brightening customers’ day with small actions will bring tremendous value. 

To verify that theory of reciprocity, an experiment was conducted in a restaurant where waiters would give a mint to customers after meals. Here are the results. Tips increased by:

  • 3%.
  • 14% if they gave two mints. 
  • 23% when the waiter put a mint candy on the bill but returned soon after that to give guests another mint.

When customers are well treated, especially when they don’t expect it, they would have a much better impression of the quality of your service. A small action, a simple gesture can make them satisfied and give you back more profits. The feeling of satisfaction is also what keeps customers stuck with the business.

Surprise Your Customers With Handwritten Thank-you Notes, For Example

Be the first to give without expecting anything in return. When you care genuinely for your customers, you will find many ways to surprise them. The customers are sure to be delighted with petite delightful surprises like a birthday message or take-care notes. Once customers have bought from you, don’t end the relationship! 

Engage them, interact with them to build a long-term relationship by sending personalized handwriting thank you cards to express gratitude and give out reciprocity to customers.

You might also like: Ultimate Guide to Customer Loyalty.

#8 Educate And Engage Customers With New Features Or Tutorials

Don’t just sell.

While everybody is busy promoting new products and services, there is a lack of education on various products. This is one of the lead causes of low product demand for specific products. Educating customers can have a significant impact on your business. Let me explain how.

When a new innovative product launches, the customers aren’t aware of the product or its usage. Therefore, most customers neglect it and move on. While some that are interested will try to find more about the product from any source, they can find the information in the exploration process. The customer finds new sources to get the product, and they are attracted by other brands that are offering similar products. 

However, if you only educate the customer with the required information, you may get the given benefits:

  • Improved customer satisfaction.
  • More trustworthiness to your brand. 
  • Increased loyalty.
  • Boosted customer engagement.
  • Higher quality customer support.

In the CX Solutions study mentioned in the example above section, actively providing information on how to avoid problems does increase repurchases or referral rates up to 32%.

That said, you don’t want to let your customers try to find ways around your products. Using without specific instructions can lead to unpredicted and unfortunate consequences that adversely affect the company’s reputation. 

Having good products is not enough, customers need to know how to use them correctly. Here are some guidance techniques that can be utilized.

Whole Foods customer education strategy is an excellent example of this. Apart from providing fresh and authentic food items, they provide the best recipes for the products that they sell. Apart from that, they also conduct many campaigns and events in which they educate people about the benefits of targeted products. 

In March 2019, they held an event to educate  people about the harmful effects of various chemicals in cosmetic products. They also offered free products to the first 200 consumers in exchange for empty containers

This campaign helped them in making people aware that they should avoid phthalates, parabens, and microbeads made products. Post this effort of the marketing funnel, the market for their products grew at a better rate than before. 

Make sure you have simple tutorials and advice, step-by-step instructions for customers to follow.

  • For customers who like to self-study, create an online training series.
  • Use email marketing to send periodic emails educating and onboarding the new customers about the process of using your product
  • For customers who want expert guidance, give them the option of one-on-one coaching sessions with your specialist.
  • Create a community where a team of experts is 24/7 ready for users to easily contact or ask for help.

HappyPoints, a Shopify development company, did this very well with their Free migration checklist for Shopify. Besides having CTAs about their migration checklist, this company gave out a beneficial document to support their subscribers.

#9 Focus On Service Before Delight

As an old saying goes “can’t make bricks without straw”, your service must be the core. The added delights or reciprocities only come in second place. As shown in a study on Customer Service, delighting customers doesn’t build loyalty. Businesses need to focus on improving the quality of services. 

Effective communication with customers via multiple channels is required to receive feedback and provide timely assistance to customers. Auto answering forms, live chat plugins are not entirely reliable in case of an unstable connection. That’s why it’s necessary to have a complete and detailed user guide available online and offline so that customers can help themselves. Besides, you should have a hotline for all-time and direct connection.

However, businesses should not be ignored for the helpful and rapid help of modern applications. Recommended by Help Scout for confirming its effectiveness, Slack is an online management tool for team players to access and receive instant notifications from customers. Thanks to making use of human resources in the support channel, the effectiveness of responding to buyers’ feedback increases by 340%.

You might also like: How To Master Customer Service?

#10 Build Customer Loyalty Programs The Right Way

Giving out some added benefits to attract customers to re-buy is the basis of any loyalty plans. But first, put yourself in your customer’s shoes and ask yourself: 

  • Why do customers want to use your loyalty program?
  • What will they get from this program?

People love being VIP or “gold”

A study from Stanford University confirms the use of positive traits to make people engaged intensively in something. The customers want to be part of something “amazing” or “awesome”. To motivate customers to repurchase, you better make them a VIP or “golden” member.

To avail the maximum benefit, you need to focus on the following parameters for the loyalty programs:

  • Make the customer an inclusive part of your organization so that they stay loyal to your business. 
  • It should be focused on giving some sort of benefit to the customer every time. This will help in maintaining the spending habit of the customer. 
  • To understand customer habits, preferences, and buying patterns. 
  • Showing your appreciation to the customer by providing them discount coupons and rewards for purchases done in the past. This will encourage them to increase their buying activity.
customer retention vs acquisition
Source: Ghacks

Wrapping Up The Importance Of Customers – The Big Picture!

A modern-day customer has become more powerful as compared to the customers of traditional times. This is simply because of the availability of the plethora of services and the power to choose with ease. 

So, to attract and retain your business customers, you need to keep updating your strategies and explicitly work on improving customer relations. It’s important to attract new customers, however, if you are unable to retain existing customers and build loyal customer support, the long-term health of the business is in jeopardy. Sustainable customer loyalty must be based on product quality. Once your company’s products or services meet the current and foreseen needs of the customer, the business can take advantage of the above ways to boost the customer retention rate and grow a long-lasting successful business.

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