What is the Difference Between Customer Acquisition & Customer Retention
Businesses and business ventures are tricky.
Depending on the maturity as well as the scale of a business, priorities may differ between focusing on gaining customers or in maintaining customer patronage. It may be dependent on projected targets or on growing coverage.
Small, medium and large-scale businesses have varying views of what is important, but the fact remains that businesses need customers regardless of whether they are one-time customers, occasional patrons or loyal clients.
Gaining customers are where all businesses truly start from. A lot of people will say that it’s in the idea or concept that a business actually begins with. But the very nature of supply and demand is rooted in tangible commerce.
A business cannot be called a business without customers – supplies need to be consumed and demands need to be satiated.
Acquisition, however, is no simple thing. It involves great risk with significant expenses; all of which is invested in what is essentially a game of probability.
Competition affects business as soon as any demand is identified by a supplier. So it is a great idea to create specific target markets. Either based on age, location or defined preferences.
“Show me one person who wants one thing and I’ll show you ten people who can sell it to him”
Managing the acquisition of customers requires 4 key considerations – Competition, Budget, Targeting and Content. Although these are also considerations for Customer Retention, their effects are the heaviest in Acquisition.
This is the first consideration for one good reason: competition is the basis for how every other action and decision will proceed. The more competitors, the harder the effort and the more complex the task of acquisition becomes.
In acquisition it’s literally a “Spend money to make money” philosophy. A business needs to spend (at great risk) to acquire even just a percentage of their target market. Literally using money that does not come from profits earned from that potential customer.
The financial risk of acquisition can, in some way, be minimized by proper targeting. By studying competition, it becomes much easier to know what areas to focus on (or avoid) and also how much (or how less) should be dedicated financially.
Content is anything created to attract, entice or catch the attention of your potential customers. By knowing your competition, you’ll know what innovation or edge you can offer, how much or what kind of content to invest in, which types of clients to focus on and finally, how to present your content in the most effective way.
Keeping customers is a whole different ballgame than acquisition. Retention is what makes a business an established brand. It’s literally a steady return of investment with the added benefit of having a steady profit.
The risk still exists in retention but it’s not as prevalent because the risk has already been somewhat balanced by the fact that the business is investing in a verified paying customer.
“A well cared for customer stays loyal, regardless of how many enticing offers come their way. Why? Simple – Security”
Retention also has considerations for proper management. It’s the strategies of keeping a customer by knowing how to make them feel secure and in turn – stay loyal.
Reinvesting in customers
It’s never a bad idea to reinvest in customers. If budgeting for acquisition is a “Spend Money to Make Money” philosophy, retention is “Spin Money to Make Money”; which means spending profits on known paying customers to ensure profits keep coming.
Keeping the Right Customers
Businesses need to protect their brand and sometimes, businesses need to protect their customers – even from their fellow customers. Most businesses are associated with a brand, just as some brands are associated with a specific customer demographic.
Knowing which populations a brand should be associated with actually protects a brand from overall ruin.
It may sound like a political move or a social preference, but the truth is, it’s actually related to growth. Growth can only be achieved by a business that understands the power of association.
Provide Extended Support
Nothing creates a feeling of security and the value of loyalty better than seamless customer support. Acquiring good customer support services helps a business become more capable to address concerns.
While proper training in customer handling, empathy and urgency creates customers that are more than happy to recommend a business/brand. Hence, making retention a precursor to acquisition.
Retained customers are a great basis for projected demands, a lot of new offers can be created through specific customer preferences, requests and feedback.
By reinvesting in customers, more and deeper data can be acquired, by having the right demographic of customers, data can be narrowed-down and through data from extended support feedback, innovations can be made and offers can be generated.
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