Customer Retention Vs. Customer Acquisition

    customer retention vs customer acquisition

    Businesses must ensure that their strategies cater to their customers at the best possible level. However, they need to follow two separate paths of strategy: getting new customers and keeping the existing ones happy. here is what they need to understand in their strategy planning regarding customer retention vs. customer acquisition.

    Customer acquisition focuses on finding new customers. On the other hand, customer retention aims to retain existing customers and keep them happy.

    Businesses reach out to interested groups when they need to acquire new customers. This involves exploring new target groups and understanding what they can offer there. To keep customers, businesses need to ensure they are updated with their preferences and provide them with a good experience. This way, they can keep existing customers loyal.

    The acquisition and retention of customers help brands succeed but involve different strategies.

    For instance, acquisition concentrates on methods that align with market expansion or the launching of new products. On the other hand, retention usually operates alongside enhancing customer service and boosting customer lifetime value (CLV).

    Customer Acquisition Vs Customer Retention: What Are the Differences?

    Both customer acquisition and retention are crucial to the development and survival of an organization. Here is a comparison between the two:

    • Cost

    In acquisition, businesses often choose to spend money to attract new customers. But, getting new customers is usually more expensive than keeping the ones you have.

    Through retention, companies invest in building trust with people. Marketing strategies for retention are usually cheaper than those for acquisition.

    • Objective

    In acquisition, the main goal is to attract and convince potential customers to buy. This means sharing information about the product or service, and creating the demand for it.

    The primary goal in retention is to retain current customers by building and increasing their loyalty and satisfaction. This means providing excellent customer service, surpassing customers’ expectations, and building good loyalty programs.

    • Strategies and Techniques

    Acquisition techniques that are given importance are:

    • Content Marketing,
    • SEO,
    • Social Media Marketing,
    • Sales Promotions,
    • PR Initiatives

    Retention techniques that are given importance are:

    • Personalized Customer Service,
    • Customer Loyalty Programs,
    • Ongoing Customer Engagement
    • Metrics

    Acquiring new customers is a top priority for businesses, especially B2C like eCommerce websites and trade companies. A healthy leads pipeline signals that the brand continuously grows its reach and attracts new customers.

    To measure the effectiveness of customer acquisition strategies, marketers need to have data on:

    • Cost of customer acquisition (CAC),
    • Conversion rate,
    • Customer lifetime value (CLV), and
    • ROI of marketing campaigns.

    Customer retention metrics measure the customer satisfaction and loyalty to a brand.

    The essential metrics for retention are

    • Churn rate,
    • Repeat purchase rate,
    • Customer loyalty indices (like net promoter score),
    • Average revenue per user (ARPU), and
    • CLV
    • Time Frame

    Customer acquisition is a long process. The sales process covers every step, from creating awareness to converting a prospect into a customer. The duration of the process also depends on the complexity of the product or service. It will indicate the effectiveness of the sales process, and the efficiency of marketing efforts.

    The time frame for customer retention varies considerably. It begins with the initial purchase and continues throughout the customer and business relationship. Extending this period as much as possible is important to increase the customer’s lifetime value.

    • Risk and Uncertainty

    Customer acquisition involves more risk and uncertainty. Newer customers may not be interested in the product or service. Or, there may be competing brands that offer more suitable products. Either way, marketing to newer customers has inherent risks.

    Since the business already has an established relationship with its current consumers, the risk of losing them is significantly less. However, customers may leave because of dissatisfaction, better choices from competitors, or changes in their needs.

    • Impact On Profitability

    The high costs involved with customer acquisition might impact short-term profitability even though they are vital for growth. Long-term profitability, however, depends on whether a customer’s lifetime value is greater than the cost of acquisition.

    Customer retention demands less marketing investment. Customers are more likely to buy extra products or services and may back the brand, which encourages referrals. Therefore, increasing profitability depends greatly on increasing customer retention.

    • Customer Relationship

    In customer acquisition, customer interactions are often transactional. Businesses aim to persuade potential customers to try their products or services.

    The relationship is more interpersonal in customer retention. Businesses focus on developing more long-term customer relationships to serve their customers better.

    When Does Customer Acquisition Matter?

    In the growth stage, companies focus on acquiring customers. New businesses need to concentrate on making the brand recognizable and acquiring customers. This will directly impact the business’s revenue.

    First, brands must ensure a significant pipeline, clear messaging, and brand voice. More importantly, they must ensure that their product meets the market’s needs. Customer acquisition is also important when a company is entering a new market.

    When to Focus on Customer Retention?

    Brands benefit from keeping customers because it costs less than finding new ones. A company with many customers can focus more on keeping them. Also, efforts to keep customers can lead to new customers through referrals from loyal customers.

    Marketers must use data to create clear segments, target groups, and strategies. Data models can help identify early signs of customers likely to leave. Marketers also need to listen to customers to uncover their pain points.


    Various factors determine and impact customer retention or acquisition. These could be about the brand reputation. It could also be a factor of where customers are in their relationship with the brand. With these evary9ing factors, businesses must strategize on what works best for them.

    They should analyze their objectives to decide whether to retain or acquire new customers.

    Getting new customers costs more than keeping current ones. However, it is also crucial for new brands to expand to newer areas.

    Despite the fact that acquiring new customers takes more investment than retaining earlier ones, this call is critical. Marketing teams that automate marketing strategies and activities can weigh their options. With good data, these tools can help brands strike a good balance between getting new customers and keeping the ones they already have.

    Previous articleTempest and SnapSea Form Strategic Partnership
    Next articleMirriad and Insight TV Announce Strategic Partnership
    Aafreen Shaikh
    Aafreen Shaikh is a Senior Associate Editor with OnDot Media. She has had professional exposure in the research industry for 6+ years. She is interested in several topics, such as AI, IoT, and marketing strategies to mention a few. When not absorbed in the latest gripping page-turner, Aafreen loves spending far too much time playing the latest games on the computer. She also loves to stay abreast of industry trends and reads up on as many publications in that domain. Her insights in the IT domain are translated into the crisp and fresh perspective-based content she creates.