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Customer Retention vs Customer Acquisition

October 21, 2013
2 min read
Customer Retention vs Customer Acquisition

In a white paper titled Share Of Market Feeds The Ego, Performark powerfully argues that businesses tend to obsess over customer acquisition rather than customer retention...

... even though the latter is far more cost-effective.

The idea of having lots of new customers is exciting, and it's a great vanity metric to brag about.

In contrast, the idea of delighting existing customers feels tedious and unglamorous.

But here's why your existing customers are really, really worth your time (and money):

1: It is easier to convince existing customers to buy again.

  • They're more likely to buy. The probability of selling to an existing customer (60-70%) is much higher than that of selling to a new one (5-20%). [1]
  • They're less price sensitive. 85% of customers reported that they wouldn't mind paying more for the assurance of superior customer experience.

It's consistent with our own experiences as consumers- everybody prefers to do business with a brand that they trust.

2: It costs much more to acquire a new customer than to keep one.

  • It can be 5 to 20 times cheaper to get repeat purchases. [2] You no longer have to go through the lengthy, costly process of finding and persuading potential leads. Your loyal customers are likely to be following you already. They require only a small 'nudge' to buy again - perhaps with a loyalty program or exclusive discounts.

Think about increasing the lifetime value of your customers. Getting new customers isn't the only way to build your business.

But... I have so many things to handle in my store. Is there some way I can fit retention marketing without taking up too much of my time?

I feel you. Running an ecommerce store can be a huge time sink. You surely have many other priorities such as inventory management, marketing and (above all), focusing on building a great product for your customers.

This is where SaaS apps come in. There are plenty of apps out there that can help you manage your existing customers. Examples include Windsor Circle, Mineful and RetentionGrid.

After spending some time looking through them all, we decided that RetentionGrid's our favourite.

Let's have a look at it:

RetentionGrid helps you make retention marketing as easy as ABC.

We like RetentionGrid because it...

  1. Segments your customers into several categories. This is determined by graphing the quantity of orders made against the date of the last order.
  2. Is visually elegant and understandable. RetentionGrid displays an easy-to-use color-coded grid to represent the different customer groups, and a click on each color region gives you the vital statistics.
  3. Allows you to reach out to different segments selectively. Different customer groups require different strategies to retain them.
  4. Is FREE to use! They only charge you if you want more personalized advice and ongoing support on managing your retention marketing efforts.

You've got nothing to lose, so give it a try and let us know how it works for you!

Links and Sources:



Aaron is an intern at ReferralCandy. He loves travelling.

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