Why Retention is as Important as Acquisition
Focusing on acquisition is still the default setting for many companies – but this is quickly becoming an outdated ideology. But why is retention is as important as acquisition? Forrester research indicates that:
“Marketers obsess over acquisition. Even as the lines between marketing and customer experience blur, our survey respondents prioritize customer acquisition efforts over nurturing and deepening relationships with their most valuable and loyal customers.”
This is dumbfounding when by all indications, shifting the focus to customer retention leads to an increase in profits.
To put it simply: focus on the Diamonds – not the Seagulls.
The Diamonds are your audience segments that add value to your brand through advocacy, purchase frequency, basket-size, loyalty etc. The Seagulls are the ones who fly into your store, make a mess on your floor and fly off again – a la Groupon-style.
You don’t get a more compelling business case for shifting more of the marketing budget towards retaining and nurturing existing customers than that. So why are marketers still holding back? Why are they killing the path to higher profits?
It’s all about the priorities – shifting the focus and budget to retention is not easy, especially when:
- Acquisition programs are more visible, generate quicker results and, when done well, can be felt throughout the entire organization, and;
- Retention programs require longer-term strategic thinking, more time to prove their worth, and (for some), an unfamiliar technology to guide and optimize the lifetime value of the customer.
This procrastination may also explain another interesting statistic:
- While 76% of companies see CLV (Customer Lifetime Value) as an important concept of their organization, only 42% are able to measure it accurately.
At Riverview, we are obsessed with making the end customer experience engaging, seamless and targeted – almost as much as we are to making our client experience intuitive, intelligent and easy to navigate. Simply put, we make understanding and growing customer lifetime value a piece of cake so budgets can be more rightfully distributed between acquisition and retention tactics.
Are you interested in learning more about how focusing on loyalty and retention can help your relationship with customers grow?