Customer acquisition and retention are the top marketing initiatives in 2022
HubSpot’s recently released their 2021 State of Marketing report and customer acquisition and customer retention are top of mind for marketers heading into 2022.
To be more specific, marketers are wanting to generate more leads (35%), increase customer satisfaction (22%), increase brand awareness (18%), close more deals (14%), and increase customer retention (8%). Each of these marketing priorities can be rolled into two main goals and objectives–acquiring new customers and retaining existing ones.
What’s unfortunate is that customer retention is so low on marketer’s priority list (less than 10%). Before we analyze this further, let’s start with a few definitions.
What is customer acquisition?
Customer acquisition is marketing tactic with the intent of bringing in new customers to your business. It involves reaching customers across the entire buyer journey, from the time they visit a web site, subscribe to a newsletter, follow your brand on social media, until they a become a paying customer.
Most marketers associate customer acquisition with direct marketing. This includes paid search, email marketing, and display advertising; and typically involves driving web traffic to an e-commerce store if you’re a consumer brand or to download some type of digital asset if you’re a B2B brand. The goal is to sell more products/services and generate more leads (email addresses and phone numbers). It’s 100% transactional and measurement is a breeze.
What is customer retention?
Customer retention is a marketing approach that focuses on delivering stellar customer experiences and product innovation with the goal of building long-term customer lifetime value.
Customer retention marketing can include tactics like building an online community so that customers can exchange ideas, give product feedback, and build relationships with each other. Some brands are also doubling down by building and scaling their social customer service operation so they can solve customer complaints quickly and efficiently. More sophisticated brands are creating customer advocacy programs and activating their users to participate in brand marketing initiatives.
Each of these examples are about building customer and brand love, loyalty and keeping them motivated to buy. This approach is 100% relational and much harder to prove a measurable ROI.
Customer acquisition versus customer retention
According to the Institutional Shareholder Services (ISS), current customers are 60-70% more likely to repeat purchase than selling to a new customer (5-20%). There’s also a cost savings element to customer retention. It’s a known fact that acquiring new customers can be 5-10x more expensive that keeping existing ones.
And lastly, while this is a somewhat old statistic, it’s still worth bringing up. That is, increasing customer retention by only 5% can increase profits from 25-95%. If that data point is only half true, we’re still talking about huge revenue drivers.
It’s not about customer acquisition versus customer retention. One isn’t better than the other. Both marketing strategies are equally as important and should be prioritized.
If it were me though, the graph would show that customer retention is the number one priority.