Which Is More Important: Customer Acquisition or Retention?

In the business world, marketers, salespeople, and major decision-makers need to carefully consider both customer acquisition and customer retention. Customer acquisition is the process of earning new customers, often through a combination of sales, marketing, advertising, referrals, and other strategies. With it, you can expose your brand to more people, increase revenue, and expand the business.

Customer retention, on the other hand, is all about keeping the customers you already have. Its main priority is ensuring that your existing customers remain subscribed to your services – or will come back for subsequent purchases in the future.

Customer Acquisition or Retention

Clearly, both of these strategies are valuable, but which one is more important to a growing business?


First, understand that customer retention is far less costly than customer acquisition. Customer acquisition generally requires significant investment to succeed. Depending on your strategy, you might pay for ad placements, long-term marketing assets, or the salaries of salespeople reaching out to new people. No matter what, you’ll be spending thousands of dollars. But with customer retention, some of the best strategies won’t cost you much of anything; simply providing better customer service or communicating more frequently can boost retention rates.

Short-Term Benefits

Now let’s look at the short-term benefits of each strategy. Customer retention is extremely valuable for the earliest stages of your company’s growth; when you have just a few customers, every customer matters, and you can’t afford to lose them. Of course, customer acquisition is also important; otherwise, you’ll be stuck in this stage of growth indefinitely.

Long-Term Benefits

With long-term benefits, customer acquisition may have a slightly higher payoff. The more you invest in your company’s branding, marketing, and advertising, the more efficient your system is going to become – and the higher the growth rate you can achieve without significantly increasing your investment. That said, customer retention is a valuable strategy no matter how long you use it or how much your business grows.

Propensity for Growth

When it comes to growth, customer acquisition clearly has an edge. With the acquisition, you’ll have the opportunity to reach more customers, expand the business into new areas, and ultimately secure more revenue. In fact, the acquisition is the only real way to grow. However, there’s an important caveat here; if you don’t have a solid customer retention strategy in place, that extra acquisition isn’t going to matter. For example, if you’re gaining 50 new customers each week, but your customer churn causes you to lose 45 customers each week, you’ll barely be growing at all.

Which Is More Important?

So which is more important, customer acquisition or customer retention? If you want your business to succeed, you’re going to need both. But the edge goes to customer retention. Without customer retention, your customer acquisition strategy will lose value, since you’ll lose customers at a rate comparable to the rate you’re gaining them. It’s also much less expensive and more efficient, leading you to more sustainable returns.

If you can only focus on one, focus on customer retention.

Establishing Customer Retention

What steps can you take to establish or improve your customer retention?

  • Product/service quality. The obvious step to take here is to improve the quality of your products and services. If you sell an amazing product that changes someone’s life for the better, and you’re only charging $1 per month, your customers will never leave. Keep making your offer better, so your customers will never want to leave.
  • Better customer service. It’s not just about the quality of your core products and services. It’s also about your quality of customer service. When something goes wrong, customers need to trust that you’ll work to resolve the issue. Even one bad experience can make a customer leave.
  • Ongoing communication. It also pays to improve top-of-mind awareness with ongoing communication. Keep in touch with customers with things like drip email campaigns, company newsletters, and engagements on social media. It’s an easy way to keep people connected to your brand.
  • Loyalty rewards. Customers are much more likely to stay with your brand if they have a clear, logical reason to do so. That’s why loyalty rewards are so important. Loyalty programs and gifts for loyal customers will naturally encourage more retention.
  • Feedback. Finally, make sure to collect and act on customer feedback in every area of your business. Your customers will tell you if there’s something wrong or something missing, so it’s imperative to listen to them and take them seriously. Conduct customer surveys on a regular basis to stay “plugged in.”

With a solid customer retention strategy in place, your business will have a strong foundation on which it can build. From there, you can work on customer acquisition and gradually expand your business to reach your long-term goals.

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He is a digital marketing scholar by choice and tech-savvy by habit, also consulting and nurturing many fastest growing businesses and blogs.


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