Customer acquisition or retention – why choose?
Customer acquisition or retention – why choose?
The only way to ensure sustainable growth and long-term success is to balance your focus between acquiring new customers and retaining existing ones. The balance depends on the phase of your business, its maturity, and the market conditions.
And although there are obvious reasons for that focus should most of the times lean towards customer retention, there are circumstances that requires the opposite.
By adjusting your strategies according to these factors, you can optimize both acquisition and retention efforts to build a robust customer base and secure steady revenue streams.
Funny thing though, with Byebuy you you don’t need to choose!
Customer acquisition or retention - why choose?
Customer acquisition or retention – why choose?
In this article
When to focus on customer acquisition, and why?
Customer acquisition or retention - why choose?
Here are some scenarios when acquisition should be your focus:
- You are an Early-Stage Startup – In the early stages, startups need to build a customer base quickly to validate their business model, generate initial revenue, and attract potential investors. At this stage, acquiring new customers helps establish market presence and awareness.
- You are Entering New Markets – When a business is expanding into new geographic or demographic markets, the primary focus should be on acquisition to establish a foothold in these new areas. This involves aggressive marketing campaigns and outreach to attract a new customer base.
- You are in a High Churn Industry – In industries with naturally high customer turnover, such as telecommunications or insurance, it might be more practical to focus on acquiring new customers.
- You are an Launching a product – When launching a new product or service, the goal is to generate buzz and attract a significant number of initial users or buyers. During this phase, marketing efforts are geared towards acquisition to ensure the product reaches a wide audience quickly.
- You are in a Growth & Expansion Phase – Businesses in a growth phase may prioritize acquisition to scale rapidly and increase market share. The focus here is on capturing as much of the market as possible, which requires a strong emphasis on acquiring new customers.
- You operate on highly Competitive Markets – In highly competitive markets, gaining new customers can be essential to outpace competitors. This involves aggressive marketing and sales strategies aimed at converting prospects who are currently served by competitors.
In a summary: if you are en early-stage startup, entering new markets or operating high churn industries your focus should be to generate new customers. Also when launching new products or if you are in a growth phase, and when operating in highly competitive markets you may focus on new customers.
When to focus on customer retention, and why?
Customer acquisition or retention - why choose?
Customer acquisition or retention – why choose?
It would be easy to say that if you don’t checkmark any of the scenarios above, you should put more effort in customer retention. But here are som scenarios for recognition.
- You are an Established Business – For businesses that have already built a substantial customer base, retaining customers becomes vital.
- You are operating on Competitive Markets – In highly competitive industries, retaining customers can be key to maintaining market share. Loyal customers are less likely to switch to competitors, providing you a stable revenue stream.
. - You utilize Subscription-Based Models – Businesses with subscription models, such as SaaS companies, rely heavily on customer retention to ensure recurring revenue. High retention rates lead to steady cash flow and higher customer lifetime value.
- You need Long-Term Relationships – For products or services that benefit from long-term customer relationships, such as financial services or health care, focusing on retention can build trust and increase lifetime value.
- You see High Customer Acquisition Costs – In industries where acquiring new customers is particularly expensive, investing in retention strategies can be more cost-effective. By focusing on customer satisfaction and loyalty programs, businesses can maximize the return on investment from their existing customer base.
Benefits of customer retention !
Customer acquisition or retention - why choose?
Customer acquisition or retention – why choose?
Although it is for most business crucial to constantly acquiring new customers. There are several factors that clearly shows that focus for most companies should lean towards customer retention.
Reasons to put your effort on customer retention:
- Higher Sales Success Rate: Existing customers are more receptive to sales. According to HubSpot, a brand has a 60-70% chance of making sales to an existing customer, compared to only a 20% chance with non-customers.
- Foundation for Revenue Growth: Maintaining a loyal base of core customers creates opportunities for additional revenue.
- Willingness to Pay More: Good customer experience is crucial for retention. Research by PWC suggests that 86% of buyers are willing to pay more for a good customer experience, making happy customers more profitable.
- Referral Power: Happy customers are likely to recommend your business to others. Neilsen found that 9 out of 10 consumers trust referrals from friends and family over any other form of advertising.
- Higher ROI: Focusing on existing customers can lead to higher ROI by reducing overall acquisition costs and increasing the lifetime value of each customer.
Customer acquisition or retention – why choose?
Statistics indicate that increasing customer retention by 5% can boost a company’s profits by 25% to 95% over time.
Studies show that existing customers are 50% more likely to try new products and spend 31% more than new customers.
Customer acquisition or retention - why choose?
Customer acquisition or retention – why choose?
No need to focus!
Pay per click Advertising Benchmarks 2024
Byebuy is a platform for generating customer engagement that has proved to deliver unmatched results. The result you get are direct sales, indirect sales, loyal customers and new customers.
Being a platform for customer engagement best results derives from when you already have a customer base, yet it’s not necessary.
The key to success lays in the efficiency, easiness and the low costs of usage. The proven effect is that you will increase your full price sales and your margins.
Following the right recipe the platform will automatically generate loyal customers. The loyal customers will themselves generate new customers.
Byebuy - running whole sales process!
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Byebuy gives you clicks! – It’s up to you to decide from where. Best result will you get when using your current network, eg. social media or customer club. On this matter we use the phrase “Click to win”. That phrase generates much better CTR than “Click to get”.
Byebuy gives you attention! – perhaps the most important and hardest phase in the sales process. From the promise of “Click to win” your customer becomes a partaker in your contest. The delivery of the contest is the key. With Byebuy you deliver your contest in a video where viewers being interactive becomes partakers. The video generates immediate trust and the viewers stays at your page to partake and register to win.
Customer acquisition or retention – why choose?
Byebuy gives you sales! – The sales will in first hand come from the fact that your customer will compete about buying your products. Instead of giving same discounts to every one, you will have them to fight about the discount. You decide how many that have to partake in your contests and also how many that will get to win eg. the discount (see contests).
The winners will pay for their win (your products).
With the attention you get on social media, the visitors and partakers it is likely that you also see increased sales.
By repeating the customer engagement with contests you build loyalty and you generate new customers.
By your customers compete about buying your products it is easy to generate net profit on the contests alone. Then the increase of full price sales and the higher margins comes automatically.
Customer acquisition or retention – why choose?
