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Balancing customer acquisition and customer retention is a tricky equation.
As business owners, when we want to increase the revenue our business is generating, reaching a broader audience and acquiring new customers is often our first train of thought.
But is it where you’ll get the best bang for your buck (or the fastest results)?
Email marketing is my favourite marketing channel. By now, that’s probably not a surprise. But one of the reasons I view it so fondly is because it can play a major role in BOTH the customer acquisition and customer retention efforts of a business.
When resources are scarce, it’s a platform that can get a lot of marketing jobs done.
Customer retention vs customer acquisition
When I’m creating an email marketing strategy for a client we start off by looking at the top of the funnel:
- What actions are we taking to drive new subscribers to your mailing list?
- How are we promoting your mailing list?
- Are we using a lead magnet?
- Are we leveraging strategic partnerships?
In short, we define our list growth strategy.
And then, just as importantly:
- How are we nurturing leads once they sign up?
- How are we building our relationship with them?
- What information do we need to share before they can make a purchasing decision?
- And when do we attempt to convert them from a lead to a customer?
All of this (and plenty more) sits on the customer acquisition side of the fence when it comes to your email marketing efforts.
What’s on the customer retention side, you ask?
Here we have:
- Your post-purchase experience
- How you look to up-sell and cross-sell to your customers
- Your loyalty initiatives
- Referral requests
- Feedback requests (reviews, testimonials, market research to name a few!)
- Ongoing relationship building (i.e. how you continue to provide additional value to your customers!)
There’s also:
- Your offboarding experience, and
- How you attempt to win-back customers you’ve lost
Are you spending your time where it matters?
Now that I’ve given you a quick lay of the land when it comes to customer acquisition and customer retention from an email marketing perspective, I want you to consider this:
- When it comes to your marketing, what does your balance look like?
- How much time are you spending on acquisition efforts vs. retention efforts?
If you’re anything like the majority of businesses, according to research from eConsultancy, you’re likely skewed towards the acquisition side of the fence. And that’s not necessarily a bad thing either – it’s an essential part of business.
But here’s a stat that may surprise you: That same research found that by increasing customer retention rates by 5% you can increase your business profits (PROFITS not revenue) by 25 – 95%!
It makes sense if you think about it.
The cost — in both time, energy and money — of retaining and upselling to an existing customer compared to the time, money and energy spent trying to acquire a new customer is significantly cheaper.
There’s an existing relationship there. Trust and rapport have been established. They know who you are and what you do already. And they’re likely expecting to hear from you. In short, there are fewer hurdles to jump over.
It’s also likely to be easier to incorporate into your workload. Compared to a new customer, you already have some background on the business or person you’re selling to. You have more information on them at your disposal, which makes the sales process easier.
So whether your business is urgently in need of a cash injection or you’ve got some growth goals you want to hit, think about your acquisition AND your retention efforts.
When it comes to customer retention, is there some low hanging fruit you’ve missed?
