Customer Acquisition or Retention–Which is Better for Your Business?

customer acquisiton or retention--which is best for your small business and what are the benefits of each one?

Which aspect of business growth is more important–customer acquisition or retention? It’s an age-old question for small business owners. They must constantly decide where to put their precious funds and resources.

Focusing on retention means paying close attention to the needs and pain points of an existing customer base. On the other hand, customer acquisition involves the constant effort to boost brand awareness. It requires you to entice new customers to “take a chance” on your business. You have to find innovative ways to connect with prospects. This is the case, even if the business doesn’t know exactly who they are, or what specifically they want.

Here’s an in-depth look at both of these essential components of business growth.

Customer Retention

Any business that builds a reliable pool of repeat customers is doing something right. Whether their focus is on providing outstanding customer service, continuously testing the quality of their products or services, or simply making it easy for customers to purchase what they sell, their strategy to retain these loyal customers is often a successful one.

As the marketing platform Fivestars puts it, retention “is usually cheaper and it’s the lower hanging fruit.” Generally speaking, these marketing efforts are less costly and more successful. This is because “customers who are already familiar with your business, and presumably have a positive impression of you are easier to convert.” This is compared to a customer who knows little or nothing about your business.

Repeat customers are more open to a company’s marketing and sales efforts; they did business with that company in the past and, presumably, value their products or services. As Contacto constante notes, the following benefits might accrue:

  • It’s considerably less expensive to keep the customers you have than to acquire new customers.
  • Loyal customers require less time and resources to sell to, as opposed to new customers who–despite a costly marketing outreach program–may end up choosing not to purchase anything at all.
  • Focusing on repeat business means you “create a group of loyal customers that will happily … promote your business” y “refer 50 percent more people than one-time buyers.”

Maintaining ties with an established target base makes all the difference in the world between struggling to survive and anticipating a bright future.

Customer Acquisition

Acknowledging the virtues of emphasizing retention shouldn’t obscure an equally compelling fact of business life: without acquiring new customers, you don’t have a base of current customers to retain. Growth requires acquiring new customers, and even more so if a company is executing an aggressive expansion plan.

Of course, a lot of work goes into the acquisition process. A company determines quien potential new customers are, evaluates different marketing and messaging strategies, decides the best approach that’ll resonate with the target audience the most, conducts a successful sales process, and participates in related activities.

Therefore, the costs associated with customer acquisition are significantly higher than that around retention. According to Agile CRM, “As your customer base grows and you increase your brand awareness,” the acquiring of new customers “becomes exponentially easier.” The key is leveraging the acquisition of new customers “to solidify their trust in your ability to support them and make them successful.”

How to Boost Customer Retention

Unfortunately, businesses don’t always work as hard to retain customers as they do in attempting to gain new ones. But, successful retention efforts cost less and demand less time and effort than the acquisition process. Consider the following action steps to keep a focus on loyal customers:

  • Always make certain new customers get the support and guidance they need from the moment of the sale and beyond.
  • Generate “how-to” and other related content addressing the constant needs of the new customers.
  • Check in with customers to determine their satisfaction level(s) with the products or services they purchased. Provide answers to any and all questions ASAP.
  • Let these customers know of product upgrades, repairs to computer glitches and other changes in the business that might affect them.
  • Establish a state-of-the-art customer response and support system. Keep in mind: One negative experience with your business can turn a trusted customer into someone who never buys from you again. Do everything you can to provide support and guidance for any problem a customer encounters.

These action steps require additional funds and resources. But if they aid in boosting retention, they are worth every penny.

The Key to Acquiring New Customers

For “new customer acquisition in 2020, business owners should balance past tactics with new strategies.” A focus on specific strategies can help businesses achieve this vital objective. These include:

Refocus efforts on target customers.

Clearly identify specific groups of customers to whom your product or service is most attractive. Avoid wasting time and resources where the chances of generating new customers are slim.

Embark on social media campaigns.

Leverage social media to attract new business. This can result in higher brand awareness through the distribution of free, value-added content. Paid social media efforts can be equally effective in increasing brand visibility within your target audience.

Try a focused product or service giveaway initiative.

Giving prospects a chance to experience your offering on their own terms (and at no charge) can result in a favorable experience that leads to the next step of the purchasing journey. Free product trials and/or no-cost software downloads can go a long way towards demonstrating the benefits of your offering.


In the end, every business has to find its own balance between acquisition or retention. A lot depends on the stage of growth a business is in, and the particular growth strategy to which it commits. Without new customers, a business can’t grow. Without a base of loyal customers, growth is equally problematic. Find the right balance and you have the potential for unprecedented expansion in 2020 and beyond.

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