Customer Acquisition vs. Client Retention

Customer Acquisition vs. Client Retention

Analysts estimate that acquiring a new customer costs anywhere between 6 to 7 times more than retaining an existing one. While it’s important to gain new customers, it’s even more crucial to keep the ones you already have.

Costs associated with customer acquisition 

Some entrepreneurs and salespeople don’t think about how much a new customer costs – and while there are formulas out there for figuring out exactly how much new customer acquisition costs, we’re going to look at the costs in broader terms:

Personal selling

Sales staff fall into two categories. In many businesses, a salesperson works with prospects to hopefully close a sale, then has very little involvement with that customer. The more common scenario is a salesperson who not only brings in a client, but also services that client to a large extent. Either way, the costs associated with personal sales can be great.

Advertising/Promotional costs 

Online advertising, traditional print advertising, promotions, direct mail, a marketing partner or department – these are all costs associated with customer acquisition. Some of these things can also be helpful with customer retention, but the main focus of marketing, advertising, and promotion is to bring new customers to your business.

Price pressure 

One of the things businesses face when selling to a new prospect is downward pressure on price. When a customer is deciding whether to buy your product or service, you are still an unknown – you are unproven to them. This is one of the reasons you see special package deals from cable companies, etc. for “new customers only.” That’s how they get them to switch.

But it’s a delicate dance. Lower your prices too much in order to make the sale, and you’ll be expected to maintain those pricing levels – which may or may not be sustainable. Or, offer special pricing for a finite period of time until you’ve wowed your customer – and hope you’ve wowed them enough to keep them interested.


Any time you acquire a new customer, there’s a transition. You may have to educate them about your product or your business. Plus, you will likely need to educate your staff about that particular customer so you’re better able to service the account. You may have to set up an account – including credit applications, payment terms, contracts, etc. Sure, it’s part of the “cost of doing business,” but it’s a cost all the same.

Benefits of customer retention 

Keeping a client for the long term – and keeping them happy – is critical for the success of your business. What does a repeat customer bring to your business?


We. Love. Referrals. And so should everyone. Referrals are not only a “pat on the back” from a satisfied client willing to put her reputation on the line by recommending you, but they’re one of the least “sales-intensive ways to get new customers. A referral will also be more educated about your business from the start, so it’s a win-win.

Reduced price pressure 

If you’re providing a consistently great product or service, along with great customer service, your clients are less likely to make price an issue. Of course there will always be some sensitivity to price – especially if someone else is wooing your client. But cultivate the right relationship and the price sensitivity should be minimal.

Repeat purchases 

Which would you rather have? A new customer? Or a reorder? Both are important, but a repeat customer is more reliable and loyal. A new customer may deal with you for a short time (maybe even just one time), whereas a repeat customer is a clear indication that this person likes your product, and feels comfortable coming back to you.

What can you do to keep the clients you have? 

We’ve established the importance of customer retention. So, what are some customer retention strategies?

Build the relationship 

You don’t have to play softball with your client every week, or go to her daughter’s soccer games. But you should remember that she has a daughter, and what her name is. People like to do business with people they like and trust, so make the effort to know what’s important to them.

Part of building a relationship with a client is getting to know more and more about their business. Ask questions if you must. In the marketing world, at least 50% of our time spent with a new client during the initial engagement is researching their business, competitors, etc. The more you know about your customer, the better you’ll be able to serve them.

Manage customer expectations 

Everyone wants everything right away – and that’s not always realistic. Make sure you’re capable of delivering to your customer what/when/where as promised. You may be able to do something faster/better, but give yourself a bit of “wiggle room” so that, even if something unexpected happens, you will still be able to keep your promise.

Offer your expertise 

While you don’t have unlimited time and resources, you should make an effort to offer your clients knowledge and opportunity that they might otherwise miss. An example: we have one client who’s not particularly tech-savvy. We had designed and build their website for them 4-5 years ago before responsive design was even “a thing.” We made sure to notify them well in advance of Google’s Mobile-friendly update. We ran the analytics and were able to show that more than 50% of their web traffic was via a mobile device, and urged them to update to a mobile-friendly design. Of course, the mobile-friendly update did bring in some work for us, but more importantly, it showed our client that we were on top of the situation.

Use Marketing Automation 

Using marketing automation tools can help to streamline repeatable processes, minimizing downtime. Marketing automation also allows you to gauge the effectiveness of certain types of communication, giving you the opportunity to change course if necessary. Marketing automation can enhance your client’s experience by tailoring your communications to their interests. And while personal interaction is still critical, automation offers additional touch points with the client.

Companies that take the time to engage with their clients, making sure they are meeting their needs and expectations, will build longer relationships with loyal clientele. Loyal customers are the key to a healthy bottom line.

Apr 21, 2015

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