The Difference Between Acquisition and Retention Marketing
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- Business Insights
The Difference Between Acquisition vs Retention
The Two Sides of Marketing: Customer Acquisition and Customer Retention
Marketing as a concept is fairly straight forward. It's ‘the actions taken to promote and sell products or services, with the ultimate goal of increasing sales and brand awareness.’
But this concept gets a bit tricky when we start looking at the two different sides of marketing — acquisition marketing and retention marketing.
On one side we have:
Acquisition marketing - a set of actions that are focused on getting people's attention, attracting the target audience to the store or getting them to make the first purchase, (aka customer acquisition).
While on the other side we have:
Retention marketing - a set of actions that are focused on keeping customer engaged, getting existing customers to come back, and to make repeat purchases, (aka customer retention).
So which should you be focused on?
That depends on what stage your business is at.
Usually if you're in the early stages and you're looking to get your first few customers, you'd be more heavily focused on acquisition marketing.
If you've already successfully acquired new customers, it would make more sense to start investing some of your resources on retention marketing, in order to increase customer lifetime value and prevent customer churn.
Examples of Acquisition Marketing and Retention Marketing
As we mentioned above, there are different sets of actions you can take to focus on each type of marketing.
Let's take a look at some examples.
Acquisition Marketing:
Paid advertising on social media
Outbound email marketing
Affiliate marketing through influencers and partners
Search engine optimization
Discounts and sales
Blogging and content marketing
Referral programs
Retention Marketing:
Membership and Loyalty programs
Surveys for customer feedback
Personalized emails or messages
User generated content
Push notifications
Email newsletters
There are a number of other strategies that can be used for acquire new customers or retain existing customers, but this should give you a general idea of what types of actions would be considered either a part of acquisition or retention.
Acquisition and Retention Marketing for Dummies
For those that are still confused, let’s look at an analogy to simplify the two concepts.
You’re on a first date. You’ve spent time and effort into making yourself presentable, and your date loves the way you look.
You start using some of the witty lines you had prepared and your date is having a blast. This would be equivalent to acquisition marketing.
Now you want to set up a second date, you have to figure out whether you'll call, email, or text your date to set up another meeting.
And once you've set up another day to meet, you need to figure out a way to keep your date interested and engaged.
You think of new topics of discussion, remember the stories they've shared during the first date and have comments or something to add to it, and you also pick out a fancy new outfit to impress them with the ultimate goal of turning that date into a real relationship.
This would be an example of retention marketing.
In other words, if acquisition marketing is the first impression you make on a customer, retention marketing is the additional effort you make to keep them interested in you and emotionally invested long-term.
The Problem with Acquisition Marketing
Generally speaking, acquisition marketing is the "go-to" method for most businesses, but it's costly. For big-budget enterprises or companies with large operating budgets, this is the simplest form of marketing and they have the money to burn.
But for businesses on a tight budget, focusing too heavily on acquisition alone could prove to be detrimental for the long-term health of the company, as it could burn through your cash a lot faster than you expect, with little to no returns.
And with social media companies changing their policies on third party information, acquisition costs have been increasing, and acquiring new customers is getting harder by the day.
Why is Retention Marketing So Important? - Paying Attention to Existing Customers
Retention marketing is often neglected, but for businesses that are on tight budgets, it could be a game changer.
What many people fail to realize is that returning customers is what keeps a business afloat.
In a study by Adobe Digital Index, over 40% of a company’s revenues come from returning customers, while they only comprise of 8% of total visitors.
Further studies on customer retention shows that it costs 7 times more to acquire new customers than to retain an old one, and loyal customers spend 67% more than new ones.
Also, increasing customer retention by 5% increases profits by 25-95%.
The numbers speak for themselves.
Channel Talk’s Retention Marketing Feature
Of course it would be easy to say Channel Talk solves all of your marketing problems! But the fact of the matter is, we don’t.
It’s rare to find a company that has a ‘cure-all’ solution to marketing on a single platform, and considering how rapidly digital marketing and tech is changing, this wouldn’t be plausible.
But the one thing that Channel Talk does outstandingly well is allow companies to retain customers by personalizing their experience.
Channel Talk recognizes that a lot of businesses overlook the importance of retention marketing, and decided to provide a marketing feature that works hand-in-hand with its CRM database, to segment customers and target marketing actions towards specific groups.
What this does, is ensure that the marketing campaigns you are trying to run stay relevant to those who are seeing the ads. Here’s an example.
Let’s say you’re a cat owner browsing through an online pet store, and the promotions that keep popping up are on discount dog food.
How likely are you to click on the ad, or have a good shopping experience?
Channel Talk could divide cat owners and dog owners, and allow businesses to run two different promotions specific to each type of pet owner.
Personalizing the experience like this encourages customers to come back to your site, which is the fundamental goal of retention marketing.
It’s simple but definitely effective.
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