Increasing Revenue: Customer Acquisition vs Customer Retention

By the ZippyCart Content Team
December 5, 2012

Regardless of the type of industry you cater to, your business can never prosper without customers. If you plan to achieve success with your business for the long term, you’ll need to identify who your target audience is and what their specific needs may be. Considering the tough competition among e-commerce store owners, it’s almost impossible to take your business to the next level without exceeding the expectations of your customers. That’s why most of the successful companies of today are people-centric or customer-focused. What are you doing to focus on your target audience?

Out in the World Wide Web, you’ll come across many customer relationship management (CRM) applications. Many e-commerce store owners have also adopted these systems to focus on both customer acquisition and customer retention. But which, according to you, is more important?

According to research, it has come to light that acquiring a new customer costs a lot more (6-10 times more) than retaining a new customer. That means you need to dedicate most of your efforts to retaining customers so that you can create loyalty and trust in your brand or products. Customers that you have retained understand your brand better than anyone else.  In fact, they are the actual advocates of your brand. It’s these retained customers (read: loyal customers) that can help you launch a word-of-mouth campaign about your services or products.

But, first you need to acquire new customers. Right?


 Though retaining customers carries a lot more significance, you also need to continuously build new relationships. First and foremost, you need to evaluate your marketing campaigns and find out which of them are working really well. But what’s actually more important is that you need to acquire only those customers that match your company’s ideal prospect profile. Your marketing campaigns, therefore, should always focus on acquiring the ‘right type of customers’, aka, your target audience.

The biggest challenge in the process of customer acquisition is identifying those channels that are best to fulfill your goals. One common mistake that most of the e-commerce business owners make is that they start to too many channels at once. If you begin with too many acquisition channels, testing and optimizing them will prove to be quite cumbersome. It’s, therefore, advisable to focus on one customer acquisition channel at a time and act according to the gathered feedback.

The feedback that you collect can help you evaluate how different classes of customers are responding to your marketing campaigns. You’ll also be able to identify their specific needs, likes, interests etc. Unless and until you understand what your customers are actually looking for, you can never develop products or services to simplify their day-to-day lives. While developing the customer acquisition strategy for your business, you’ll need to pay close attention to the best source of customers, how they locate your company, role of external resources (if any) and the ROI of your marketing campaign among others.


Retaining customers is actually about enhancing your company’s value.

In any case, it’s actually customer retention that will decide whether your e-commerce business will be able to beat out the competition. Retaining customers is actually about enhancing your company’s value. The goal of customer retention, therefore, is to create loyalty among customers and take the customer-brand relationship to the next level. This is when you start a build a vibrant community of followers around your brand or products. In order to retain customers, you’ll need to develop an effective strategy that keeps them coming back to your company for more.

For long-term client retention, you’ll need to –

  •  Be consistent with your efforts
  • Market to your existing customers or clients
  • Connect with your customers on a personal level
  • Keep up the promises that you make
  • Prove yourself to be a solution provider
  • Provide real value to your customers
  • Reward your customers for staying with you
  • Focus on acquiring more knowledge

As mentioned above, retaining an existing customer costs you a lot less than getting a new customer for your e-commerce business. However, even a minor improvement in customer retention can increase profits significantly.

Does your online business have the right type of customers? Please feel free to share your opinions in comments.

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