Customer Acquisition and Retention Strategies (Full Guide)
Table of Contents
Customer acquisition in simple terms means bringing new customers or convincing new people to buy your products. Also, it can be considered as gaining new customers. By gaining new customers simply means involving and persuading the customers to purchase a company’s product or specific services. It is a sort of brand awareness that helps the consumers to make a final decision of purchasing a product.
Customer acquisition is considered an important measure by companies and organizations as it helps in evaluating how many customers are being brought into the business. Acquisition management clearly refers to the systems and methodologies of managing customers inquiries and prospects which help in generating a variety of marketing techniques.
How are customers being acquired?
The customers are acquired through various marketing tactics, digital channels which include strategies, both online and offline. It also involves cross channel marketing campaigns which further include:
Social Media Marketing
Or any mix of marketing initiatives
For an effective customer acquisition strategy, ever-changing consumer behavior and preferences are a major thing to be involved in.
Some successful customer acquisitions strategies include are mentioned below:
- Customer referrals
- Customer loyalty programs
The Customer Acquisition Process
Customer acquisition majorly requires thoughts and strategies. There are a lot of customer acquisitions strategies that can be included in the process. Some of them are effective with the specific type of client, but there are a few basic steps that can be included in any type of customer acquisition plan.
Identification of the quality potential customers is the first or the initial step of any basic customer acquisition plan. Customer acquisition strategy involves reaching out to potential customers through call centers and mailing lists. These customer acquisition methods allow the company to determine which individuals and business exports are interested in a product or are already using a product similar to those of your company.
Once the potential customers are identified the company qualifies the lead a little further by using various research methods in order to determine the viability of the given lead. If there are any sort of chances the customer status is upgraded from the prospect and a salesperson is further assigned to interact with him.
Customer acquisition programs then include the establishment of the relationship with prospects to identify their needs and to determine how the products offered are related to those needs. Salesperson attempt to identify the unstated needs. These unstated needs are based on the data provided by the ongoing conversations and interactions with the prospects. The salesperson also identifies additional needs of the prospects and then provides additional products as the prospects see a greater value from purchasing the products they already are considering and are willing to purchase.
Customer Acquisition Cost
The cost of acquiring a new customer is referred to as customer acquisition cost or CAC. After the completion of the customer acquisition process, customer retention and reacquisition is done. Customer acquisition cost is the last thing a company wants to spend more on. The CAC is determined by dividing the total cost associated with the acquisition by the number of total customers, within a specific period of time. The cost of customer acquisition is an important metric for companies to consider along with the lifetime value of a customer.
Benefits of Customer Acquisition
- Using appropriate customer acquisition strategies helps companies to grow, and targeted customers.
- Acquisition programs help companies to acquire the right customers in a cost-effective way.
- New companies or companies with less established products need to focus more on the customer acquisition. These companies make sure they can shift their focus from customer acquisition to customer retention.
- Companies that are already established should find ways to attract, satisfy and retain their customers.
Some really important information is that the customer acquisition cost is often higher than the customer retention cost.
HOW DO GET IT DONE?
- Define your target market
- Personalize your messaging
- Acquire customers by networking or advertising
- Leverage social media
- Make every customer experience exceptional
- Use a multi-touch approach
Retention strategies, policies, and plans are followed by an organization to reduce the turnovers, prevent attrition, increase retention of an employee and also ensure that the employees are engaged and productive in the long term. The ultimate challenge of a business is to ensure that the retention strategy aligns with the business goals along with the maximum return of investment is insured. Building this retention strategy can save a lot of time and money for an organization as it is easier and comparatively less expensive to train and develop the current employees rather than hiring new ones.
Benefits of an Effective Retention Strategy
The focus of the employee retention strategy is exactly similar to its name that is retaining employees. Besides this, it is just getting the employees to stick around in an organization for a longer period of time. Retention strategies have other positive outcomes also like:
- Lower turnover
- Lower hiring costs
- Increased employee productivity
- Higher employee satisfaction
- Stronger work relationships
- Less work-related stress
- Less burnout
This clearly means that retention strategy isn’t a good idea for an organization that wants to improve the culture, employee experience, business outcomes, and much more. It is also a good idea if the organization is experiencing higher than average turnover.
Elements of a Retention Strategy
While developing an employee retention strategy it is important to identify the areas of the employee experience so that it can actually influence them and the organization can know where to focus on for the better efforts of the employee. These areas include:
Environment: Improvement in an organization’s work environment is one of the important parts of an employees retention strategy. It completely means creating quiet spaces where employees can focus on their work, opening office space to encourage collaboration, a healthy atmosphere and also offering flexible workers and work from home options.
Culture: The organization should particularly develop a culture that makes the employees work for their organization. In particular, that is to stick around, even when people are looking for new jobs, the company culture should be the major reason because of which leaving the job should be their last option and thought.
Benefits: Providing all employees with benefits also increases retention. Health care benefits are one of the most important benefits an organization can provide. Other than that, choosing benefits that increase employee satisfaction as well as the values of employees can be provided.
Professional Development: Employees especially the millennials have that clear priority of professional development. Demonstrating the employees that their opportunity to learn and grow at the organization will encourage them to stay longer and work for them.
Rewards and Recognition: Appreciation and being rewarded is something every person looks forward to. Therefore if the employees have worked hard and still their results are not being recognized by the organization there are chances for the employee to find a better place for them.
HOW DO GET IT DONE?
- Know your customers
- Personalize offers
- Ask for feedback, act on findings
- Offer customer service “surprises”
- Respond quickly to inquiries or complaints
- Use marketing automation to re-engage customers
How to balance customer acquisition and retention?
Businesses and organizations focus more on acquiring new customers rather than maintaining and keeping the current ones. This is one of the major mistakes they do as they do not realize 70% of the chances of selling the product is through current customers and only 20% of the chances are that the product will be bought by new customers.
Now what the big question says is that balancing customer acquisitions and retention is something really big that businesses should focus on. Or is it customer retention rather than accusation?
The answer completely depends upon how successful the business is. Well-established companies and all work organizations should work on retaining current customers while startups should spend more effort in acquiring new ones. But if the business is somewhere in between the startup and the established one the balance should be maintained as it is the best approach.
There are certain ways how to balance customer acquisition and retention
- Current customer identification: Identification of the customers i.e whom to be kept and taken care of.(regular buyers /loyal customers) and the not-so-consistent ones can be weeded out. Therefore assessing the current customer base is necessary.
- Turning to online marketing: Using the internet and turning to online marketing can help, as both new and current customers are on the internet and the internet makes it easy to reach. Email, feedback mechanisms, and social media posts are some useful methods.
- Engaging current customers: Keeping the current customers feel happy and valued that is keeping them engaged is a sort of good marketing technique. Keeping the customers happy increases the chances of better sales, increasing the Goodwill in the market as the customers do some sort of publicity of a business which leads to new customers.