Businesses need to focus predominantly on two strategies to grow and thrive. To put it simply, the first one is to acquire new customers and the second one is to retain the existing ones. Both are equally important for businesses as they want to obtain new customers and keep their existing customers happy.
There might be differences between the two, yet their end goal is the same- to enhance revenue. Here we have outlined the variations between customer acquisition and customer retention and shared a few tips for you to improve both the strategies.
Customer acquisition vs customer retention
Customer acquisition is all about converting leads into customers. It plays a significant role in building a customer base. A successful customer acquisition strategy should be able to deliver a positive return on investment (ROI). The amount a customer spends over the business relationship should get the better of the cost to acquire the customer.
It should be able to identify the needs of the prospects and offer products or services at the best price. Customer acquisition is an ulterior strategy as every business has its own way to get customers on board and the competition is fierce. Decades ago, there was a limited market space for mobile phones and other auxiliary products or services. Now, the market is robust and the race to acquire new customers is serious. From smartphones to accessories and even apps, there is a perpetual contest of acquiring new customers in a market that was virtually non-existent a couple of years ago.
The world has witnessed a pandemic and the customer acquisition methods have changed along with it. For example, it has boosted the hyperlocal customer acquisition phenomenon. It is essentially a launchpad for businesses who want to get off the ground and be in the league of big shots.
“However, in order to stay on the hunt, you need both hands. If customer acquisition is the right, then customer retention is on the left.”
Customer retention is when companies apply different strategies to keep their existing customers from leaving. It increases the customer’s value by having them spend more on products or services. A successful customer retention strategy can include approaches like customer loyalty programs, upgrades, up-selling, cross-selling and more.
Keeping your customers close to you is a completely different process than customer acquisition and has to imply innovative tactics to stay an edge ahead of your competitors. It is because you are approaching someone who has already invested in your products and services and knows a lot about the quality you deliver.
Customer retention is imperative for expanding the business and taking it to the next level. It can become a catalyst for brands that are looking to take a big leap from being a small startup to a vibrant brand. In this article, we have rounded up a few tactics for both, customer acquisition and customer retention, that may serve the course for you to become a well-established company.
Tips to successful customer acquisition
Tip 1: Know your target audience
The primary step to successful customer acquisition is to identify the right audience and potential users of your brand. There are chances that the product and services you are offering are the perfectly suitable solution to the intricacy of a certain demographic of consumers. It is just a matter of time when you discover the right customer segment for your product or service and optimizes your customer acquisition strategies accordingly. The focus of your customer acquisition tactics will be primarily on the target audience.
Figuring out the audience for your offerings prevents you from limiting yourself in the context of approaching new customers effectively. It would be wise to find a niche space in the market for your product or services unless you are selling ice creams that meet the universal need.
Tip 2: Building the right acquisition channel
Until now, we hope that you got the hang of customer acquisition and how to go about it. However, knowing the ideal customer for your offerings is not enough. Identifying the right channel to acquire customers is equally important for businesses.
Now, several different frameworks can contribute to identifying the best channel that works for your customer acquisition approach. Therefore, it goes a lot of time in brainstorming and experimenting in an effort to figure out the right channel.
Let’s make things easier for you!
Step one: Set a clear goal for the campaign and what exactly you want your customer to know about you. Even if it is sketchy, it’s good. It will help you to understand whether your strategies are working out or not in different channels.
Step two: Once you have tried different channels and tested the framework, you will be able to compare their individual performances relative to each other.
Tips to successful customer retention
Tip 1: Offer personalized discounts
Customers are humans and they love to feel appreciated. One way, you can make them feel special is through personalized discounts and surprise gifts. For example, you can give them discounts on products or services that they frequently purchase or subscribe to. Not only that, you can write them a short and sweet message from the customer service team to show them they are valued. The message should portray that your brand is customer-centric and they are getting this discount for being loyal to your brand.
There is another way to do this. You can make a VIP list of your regular customers, those who often do business with you, and offer them specially customized discounts. Customers will feel delighted if they get a special discount for staying loyal to your brand. It will encourage them to purchase more from you. Tell them they are a part of an elite club of customers and it will make them feel acknowledged.
Making your customers feel appreciated doesn’t necessarily belong to a discount. You can send them gifts and tell them they are special. For example, sending a card and a shopping voucher of your brand on their birthday can make them stay with you forever.
Tip 2: Customer service is the key
This may sound absurd but brands need to consider delivering excellent customer service as a prime customer retention strategy. There is often a huge gap in perception. But think, customers will stay only when you will treat them well, make them comfortable with whatever they need. Don’t go with words, go with facts and act on it.
84 percent of consumers consider customer service to be a key factor when deciding whether to purchase, and only three percent say it’s unimportant. (Source)
Businesses need to serve their customers proactively. Resolve their issues even before it occurs. Allow them to give feedback on your products or services and implement those sincerely. Even if they had a negative experience, empathize with them. Even if they are agitated, stay composed, listen to them, don’t give up. Always remember;
“The road to a customer’s heart starts from putting a smile on their face.”
All things being equal, businesses should focus on both acquisition and retention, altogether. Eventually, both are the two sides of the same coin. The recipes to grow your business successfully; you must procure a steady stream of new customers without losing existing ones.
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