The Difference Between Acquisition vs Retention
In this article we’ll be taking a brief look at:
- The difference between acquisition and retention marketing.
- How each type of marketing affects businesses.
- Discuss why retention marketing is key to scaling businesses.
- How Channel.io’s marketing feature addresses retention marketing.
Let’s dive right in.
Marketing for eCommerce
Marketing is a dilemma that every company faces at some point in their business journey. If it’s done properly, you could see an instant boost in revenue, but if it’s done without careful planning or strategy, you could walk away with a lighter bank account and little to show for your investment. A simplified definition of marketing would be ‘the action of promoting and selling products or services, with the ultimate goal of increasing sales and brand awareness.’ Sounds simple enough. We can just put on a colorful teddy bear costume, walk out on the street and start yelling about how your store is the best in the world. That should bring people to your business right? Even your online store? Not exactly. First of all, street promotions are becoming more and more outdated as businesses transition their operations to the online playing field. Unless you have a physical shop, street gigs won’t provide the same ROIs as other marketing options available online. Second, who’s going to wear the teddy bear costume? This is where things get a bit tricky as we add the word ‘digital’ in front of the word ‘marketing.’ As we gradually progress into the digital world, there are an increasing number of factors that need to be considered before we start investing time and money into marketing.
Acquisition Marketing vs Retention Marketing
Marketing is quite complex and there are many types of marketing out there that can help business growth. Of those, there are two important types that should be considered for success in ecommerce. When people use the term ‘marketing,’ most of the time they’re referring to acquisition. Acquisition marketing refers to actions (i.e. ads on instagram) that outsource potential customers and lead them to a targeted location (i.e. your ecommerce store). Something most businesses invest a healthy chunk of their funds on. Retention marketing on the other hand, refers to actions that keep customers engaged, spend more time in your store, buy more of your products and get them to come back as loyal customers.
So why is this important to know?
Acquisition and Retention Marketing for Dummies
Let’s look at an analogy. 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 go on a second date, but you look exactly the same as you did on the first date, and your witty lines are being recycled. Your date loses interest and doesn’t call back. This would be an example of poor 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. You can see which of these will keep your business alive for much longer.
Why is Retention Marketing So Important?
Generally speaking, acquisition marketing can be costly. For big budget enterprises, this is the simplest form of marketing and they have the money to burn. 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. Not convinced? 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.io’s Retention Marketing Feature
Of course it would be easy to say Channel.io 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.io does outstandingly well is allow companies to retain customers by personalizing their experience. Channel.io 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 that 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.io 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.
Also check out:
The Pareto Principle in Business
Pet Friends' Customer Experience