It is not easy to choose between new customer acquisition and customer retention strategies. What you are selling does influence which strategy to choose. For instance, if sellers sell durable like refrigerators, the focus should be more on new customer acquisition because the same customer is not likely to buy again for a couple of years. On the other hand, nurturing an existing customer may lead to retention, repeat purchases, and referrals in the future. Ideally, you should balance both acquisition and retention and use a loyalty management platform for these purposes.
#1. The case for retention of existing customers
Customer loyalty is important and leads to retention. You can implement loyalty programs using a loyalty management platform to retain existing customers and benefit more. Compared to acquiring new customers, retention increases the chances of sales by up to 70%. Increase retention by 5% to see a jump in profits anywhere between 25% and 90%. 65% of sales in a typical business are from existing customers. Loyal customers will buy again and buy more, to the tune of 67% more. Acquiring new customers is expensive, costing seven times more and chances of selling to new target customers are between 5% and 20%. These statistics convincingly show that retention should focus, and you must concentrate efforts using the right loyalty management platform.
#2. Do not ignore acquisition—it is important!
The above statistics would lead you to believe that focusing on existing customers is more than sufficient to sustain your business. The key here is not mere sustenance but growth for which you do need to acquire more customers every day and, importantly, convert them into loyal customers. You can implement soloed marketing tactics or, better, still, unify all these under the loyalty management platform. From a single platform, you can:
- Send out emails and newsletters
- Conceive, design, and implement various marketing strategies from a single unified dashboard
- Track, analyze, generate reports
- Handle social media, chats, voice and video calls
- Convert, register as a customer, and then initiate retention programs for cross-selling and up-selling.
- Motivate and encourage distributors, wholesalers, and retailers besides end buyers, considering them all individual customers in their category.
You would need to put in more effort and find it difficult to sync marketing activities, but your task becomes easier with the loyalty management platform. You can adopt the same strategies to entice new customers as you would for retention, such as, for example:
- Offer coupons and vouchers for future purchases
- Create quizzes and competitions with prizes that hold more value, such as a holiday
- Interact on social media and directly to create more personal engagement
- Offer rewards for creative suggestions
The list is endless but could certainly decrease efforts to acquire more new customers.
The great thing about the loyalty management platform is that it treats even your distributors and dealers as customers and gives them a voice in the overall strategy and feedback. You could even create accounts for each distributor and dealer to use the platform for their marketing efforts. The acquisition is tough, and retention may seem more rewarding if you go by statistics, but you cannot do without new customers. New customers who have a favorable impression will turn to loyal customers and refer others in an ever-widening circle.
#3. Retention – creative ways
Customers are getting tired of schemes that get them to accumulate points they can exchange for discounts. It is a long and uphill road. Instead, you can use the loyalty management platform in creative ways to address various facets and get customers to be responsively loyal, not just passive.
- Interaction: Use the platform to invite existing customers to voice issues, make recommendations and earn rewards along the way. Thank them for their input which should go to improve the quality of services and products.
- Loyalty programs: The loyalty management platform is ideal for creating various loyalty programs at different levels. You can be creative, such as offering an immediate discount on purchases rather than points and then add a cherry to the offering by way of automatic enrollment in competition with prizes.
- Referral program: Customers do like to be given importance and rewards. So, if you thank them for inputs, also offer rewards if they refer friends. It is a win-win arrangement.
You can do plenty more to keep customers glued to you and your company, depending on your product and market segment. Just set up the right loyalty management platform for a jump start.
#4. Use both strategies
How will you retain a customer if you do not acquire one first? Therefore, the smart thing to do is use the loyalty management platform for both; it provides continuity of efforts. If you use a harmonized approach right from the start, then acquisition can segue easily into retention. Even before a potential customer turns into an actual one, he can see all that is on offer should they decide to become loyal customers. Acquisition and retention are not choices or adversarial but two sides of the same coin, with the platform serving as your operational theater.
It is a consensus that acquisition costs five times more, but if you follow it up with retention, you easily recoup those costs. Look at it this way: what you learn from your acquisition efforts will help you refine your retention strategy and vice versa. You will also find that it takes tremendous effort to acquire a customer. You will value your customer more and will put in more effort to retain your customer. Your efforts can be helped by the fine analytics you get from the loyalty management platform.
To conclude, it is a considered opinion that while retention appears to be the easy thing to do, you must not ignore acquisition though it is tougher and expensive.