{"id":7790,"date":"2024-01-07T14:23:59","date_gmt":"2024-01-07T14:23:59","guid":{"rendered":"https:\/\/www.valuwit.com\/?p=7790"},"modified":"2024-01-11T12:38:32","modified_gmt":"2024-01-11T12:38:32","slug":"customer-acquisition-and-retention","status":"publish","type":"post","link":"https:\/\/www.valuwit.com\/ar\/customer-acquisition-and-retention\/","title":{"rendered":"Acquisition Fever or Retention Fix? Decoding the DNA of Business Success"},"content":{"rendered":"
Customer acquisition carries a hefty price tag, sometimes up to <\/span>25 times more expensive<\/span><\/a> than retaining existing customers.\u00a0<\/span><\/p>\n It\u2019s common knowledge, supported by many studies, that customer acquisition\u2014the process of attracting new consumers\u2014is more expensive than customer retention\u2014fostering client loyalty, repeat buying, and cross-selling. However, many businesses tend to focus on acquisition and neglect fostering customer loyalty, severely impacting their bottom line.\u00a0<\/span><\/p>\n B2B companies, for example, when surveyed about their focus over the past five years when it came to customer nurturing, <\/span>only 33% noted their investment<\/span><\/a> in customer retention efforts, according to a 2024 global study by SaaS provider SugarCRM.<\/span><\/p>\n Other surveys also showed that most companies tend to center around acquisition over retention. <\/span>Roughly 44% of businesses<\/span><\/a> said they focused on acquisition and only 18% said retention was a priority for them. Agency clients reported a similar gap, with 58% focusing on acquisition, and only 12% focusing on retention.<\/span><\/p>\n It\u2019s important to note acquisition versus retention percentages vary greatly according to industry, business size, and strategy. For example, German research center, <\/span>Statista<\/span><\/a>, noted that media and professional services industries tend to have a remarkably high retention rate of 84%, mostly due to the intangible nature of business.<\/span><\/p>\n Similarly, Insurance, IT services, and telecom follow closely with retention rates of 83%, 81%, and 75%, respectively.<\/span><\/p>\n Banks tend to also have high retention rates, at around 75%; however, given the nature of the sector, most users tend not to switch banks. One study even shows the average customer lifespan with a bank at <\/span>17 years<\/span><\/a>.<\/span><\/p>\n Both, acquisition and retention are essential for every business growth, regardless of scale. After all, you can\u2019t retain clients you don\u2019t have, nor will you be able to grow without acquiring new customers.<\/span><\/p>\n Moreover, acquisition is an integral part of <\/span>launching new products, entering new markets, or diversification<\/span><\/a>.<\/span><\/p>\n That said, building brand loyalty and retention needs to be an equal priority and an integral part of your growth strategy. Besides acquisition being more expensive than retention, research shows a 5% increase in customer retention can <\/span>boost profits anywhere from 25%<\/span><\/a> up to 95%.\u00a0<\/span><\/p>\n Furthermore, a report by customer loyalty software provider,<\/span> Loyalty Lion<\/span>, shows that roughly 68% of new business comes from existing customers.<\/span><\/p>\n When companies focus on retention, including upselling and repeat purchases, they can increase their<\/span> customer lifetime value<\/span><\/a> (CLV).<\/span><\/p>\n \u201cLoyal customers spend more, become brand advocates, and are much less likely to succumb to the overtures of competitors,\u201d Loyalty Lion noted in its research.<\/span><\/p>\nDo Intangible Services Have Higher Retention Rates?<\/b><\/h2>\n
The Strategic Balance Between the Two<\/b><\/h2>\n
Grow Smart, Not Just Big<\/b><\/h2>\n