The battle of strategies: Retention versus Acquisition

Now that one of the most awaited TV series is back, we’re all in a state of restlessness. We are witnessing the great battle and we’re all taking sides. Apart from Winterfell, as we’re assuming that you are not a white walker, which other side do you support? Is your business focused on retention or acquisition? This is the big question in the world of eCommerce, but unlike the powerful Game of Thrones, your story can only have one of the two endings, success or failure. Well, in all honesty, so does the series, but we all love this multiple endings marketing catch, so we’ll just play along.

Coming back to business. Is it retention or acquisition? Because if we were to consider statistics, we might put our money on acquisition. With 44% of businesses focusing on acquisitions and only 18% on retention1, you would say the same, in our position. But is it the right choice?

It’s both or none at all

And a bit more attention to retention, if possible. You want to have new customers flooding your database, especially if you are a start-up, but at the same time, you want to retain as many of them as possible. So, in reality, bending the knee to either of these strategies is not the best of choices. You need to keep your options open. Companies should attribute these strategies equal importance because one cannot function without the other. It makes no sense to use all your resources to acquire more and more customers and do nothing to keep them close. That’s what happened to Jon Snow.

He did whatever he felt was necessary to bring home a huge army, a new army, even two full-grown dragons, but completely disregarded the army back home who had already agreed to fight by his side. What happened when he came home? His own army started to disappear. Sure, he has two dragons now, but how is he going to feed them? And by the way, the Night King perfectly understood the importance of retention, as he just keeps bringing back existing soldiers, just by pointing the finger. Literally. So, thumbs up, Night King for mastering the 80/20 rule, little effort, great results. A bit far fetched, we know, but it was too good a comparison to miss. You want arguments. Sure you do. So did Sansa, when she was asked to accept a new queen. Well, we will give you all the arguments you need. So, let’s crunch down some numbers.

RETENTION VS ACQUISITION

  • It costs 5 times more to attract new customers than to keep existing ones.2
  • 80% of revenue comes from only 20% of customers.3
  • The average global value of a lost customer is $243.4
  • By 2020, customer experience will be the most important aspect, overtaking the product and its price.5

The dragons are your acquisitions

The cost of acquiring customers can easily skyrocket and even though it gives you great satisfaction to see that your acquisition skills are functioning flawlessly, retention represents profit. Your business is hungry for profit. In the world of SaaS, retention remains king.

That monthly, ongoing gain will secure the well-being of your company. By completely disregarding retention, by doing nothing or too little to hold on to your already acquired customers, you might not be recovering just as much as your thought. And in this situation, how do you suppose the entire white walker situation is going to end?

The acquisitions of today could very well become the churned customers of tomorrow. It is very important to keep reminding yourself that retention is essential to any business, as it is cheaper to sell to your existing customers, but it is also good for business to keep your customers close and avoid the costs of lost customers.

And one more thing. Retention has proven to be highly lucrative, as it is regarded as a source of new income, due to its referral capabilities. When done correctly, retention can become a form of acquisition in itself. It creates trust and trust is a valuable commodity in the world of eCommerce, or better said especially in the world of eCommerce.

Let’s talk strategies

So far we’ve done a lot of talking, so it’s time to pass on to actions. Or better said, you will take action, based on the strategies we are going to provide you with. Hopefully, that is.

  1. Successful Onboarding

The way in which you introduce your product or service to your customers makes a huge difference. It is crucial but crucial to create a positive onboarding experience. Take the customer through your entire product, explain what he or she can achieve by using it. Also, be mindful of your customers’ goals and make sure they notice your willingness to help them in achieving goals.

Remember that onboarding is the first encounter between the customer and your product. There is no second chance to making a new first good impression. This is it. Focus on delivering a smooth onboarding experience, introduce the customer to all the features your product/service has and communicate as best as you possibly can. Work on gaining his trust.

  1. Be proactive

Being proactive is good for business, so you can imagine that it can do wonders for your retention rate. By means of a proactive attitude, you are making sure that customers aren’t forgetting everything about your product or service. Proactivity is best achieved via emails, personalized emails, that is. Keep the communication open, remind them that they’ve left something unfinished, or that you have a new feature that can help them achieve one of their goals.

Also, it wouldn’t hurt to send your customers useful content. Perhaps provide them with access into a closed group (at least make them think that they are receiving more information than anyone else) by means of newsletters. Create a user community and bring that community face to face with high-quality content.

  1. Customer support

This is probably one of the most used customer strategies there are. You must not disregard your existing customers. Focus on providing them with 5-star customer service. Plus, customer service, flawless customer service, to be more precise, works tirelessly to improve customer experience.

Now, remember what is predicted to happen in 2020. Customer experience will become the number 1 reason for purchases, surpassing price. Customer experience is crucial, both in terms of acquisition and retention, so do whatever it takes to make sure that everything is working smoothly.

  1. Feedback: Good to know, great to ask

Feedback is a many-faced god in itself. Feedback is a great tool for marketers. Not only do you gain access in the mind of your customers and understand first hand what needs to be improved, but your clients feel like they are important. Their opinion is asked for, their opinion is valued and they feel respected. Their experience matters and their feedback could improve not only their own experience but that of other visitors and users. Asking for feedback is a powerful tool in retention strategies.

Profit or satisfaction?

Steven Norman, from Growth Acumen, said it best. Winning new customers is satisfying, confirming that you are still on top of your game. Retaining them, however, is profitable6. In the end, it’s up to you. But remember this. While acquisition secures you with customers, retention gains their loyalty. So, ask yourself: isn’t loyalty the big prize? Isn’t loyalty that which will secure your place on the iron throne?

Notes:
1 https://www.invespcro.com/blog/customer-acquisition-retention/
2 https://cxoherald.com/customer-acquisition-vs-retention-costs/
3 https://www.zylotech.com/blog/customer-retention-vs-acquisition-the-great-debate
4 https://neilpatel.com/blog/retaining-customers/
5 https://gleantap.com/6-statistics-highlight-importance-customer-retention/
6 https://www.theaustralian.com.au/business/careers/winning-new-accounts-is-satisfying-retaining-them-is-profitable/news-story/9d1e85db03403c92dcb3f5534a6bea7f