Customer Acquisition Vs Customer Retention – Should You Focus on Acquiring More Customers or Retaining Your Current Ones?

Businesses all around the world face the same question at some point in their early stage of growth. Should they focus on acquisition or retention? In other words, should they be spending time trying to get more customers or should they spend more time retaining the customers they already have? You might think that it’s a pretty simple answer, but before you make your decision, you need to look at all of the angles and find the best strategy for your business in your unique industry and current situation. Here are some things to consider when deciding between customer acquisition vs retention strategies in your business.

Customer Acquisition Vs Customer Retention
Customer Acquisition Vs Customer Retention

Business owners all around the world have asked themselves whether focusing more on acquiring new clients would be better than retaining existing ones. It is crucial that businesses do not forget about either. A combination between acquires and retains seems to work well overall with no drawbacks, so focusing both ways would seem to provide diversity, security, stability, opportunities for expansion, etc.

What is customer acquisition?

Customer acquisition is all about getting your products and services out in front of as many people as possible. This is usually done through paid advertisements, but can also be through good word-of-mouth. For most businesses, it takes an initial monetary investment to acquire customers. But once you have them, they pay for themselves over time.

Acquisition and retention: the two key drivers of growth.

Acquisition and retention. Two things that have driven growth for business from their inception. No matter what stage you are in, from startup to enterprise, acquisition and retention should be part of your core focus at all times. The reason behind it is quite simple: you can always grow faster by acquiring new customers than you can by retaining your existing ones.

Acquisition grows your customer base

Acquisition is all about bringing in new customers to buy your product. To do that, you can bring on salespeople to help grow your customer base, set up advertising campaigns that drive potential customers to your site, pay affiliates for leads—there are plenty of ways to boost acquisition. Here’s an example: imagine you run a SaaS business where you sell analytics software, and you decide it would be beneficial to bring in more salespeople who are good at selling software. The more people they sell to, the more money they make for themselves and their employer (you). Now multiply those numbers by several people selling many packages over time. That’s acquisition at work—and it’s how businesses grow through that model.

Retention grows customer LTV

This is why you should put more effort into retaining your customers. If they’re loyal to your brand, you can count on higher LTVs for a much longer period of time. In order to retain customers, make sure you deliver excellent service and a high-quality product every time. Ask for feedback from your customers and keep improving your offering based on their input. Another important aspect is retention marketing—more about that later in the chapter.

Where should your dollars be best spent on acquisition or retention?

Acquisition and retention can both bring positive results for businesses, but there is one fundamental difference between them: acquisition is a one-time deal, while retention is an ongoing process. The more you focus on acquiring new customers rather than retaining your current ones, the more profitable your business will be in today’s rapidly growing and highly competitive market.

Customer Acquisition Vs.Retention Costs

One of the most obvious ways to tell if customer acquisition costs are too high is that it’s more expensive to acquire a new customer than to retain an existing one. If you do some quick back-of-the-envelope math, it should be pretty obvious whether you need to reevaluate your acquisition strategy. For example, if it costs $20 in advertising costs per new client while retaining each client costs only $2.

Why do companies focus more on acquisition than retention even after it is expensive?

Having more customers is certainly better than having none. If you have only one customer, there is nothing to scale, nothing to grow. However, if you are an established business with lots of current customers, it may be worth your time and money to focus more on your current base instead of trying to acquire new ones. It means that businesses put in effort into making sure that their existing customers stay loyal for as long as possible by increasing their lifetime value.

Acquisition boosts vanity metrics

Unlike retention, the acquisition of new customers typically boosts vanity metrics like how many users you have, how fast you’re growing, and how much your company is worth. While growth is important for any business that wants to succeed in the long term, it won’t matter if your current users are unhappy with your product. Acquisition focuses solely on acquiring new customers without thinking about what you can do to keep them around long-term. It’s more focused on quantity over quality.

The results of acquisition campaigns are more quickly evident

If you get more people to come through your door, you know you’ve been successful. In contrast, retention campaigns generally won’t show results for a long time – if ever. It can take months for customers to return from a retention campaign, which can make it hard to see your ROI from one month to another.


If you’re just starting out, then you should focus on acquiring new customers. This helps build your base of loyal customers, who are likely to come back for more in the future. Additionally, having more customers means that you have more potential referrals and word-of-mouth advertising opportunities later to capitalize on. On top of all that, growth is great for your company culture—employees want to feel like they’re part of something special.

Customer Acquisition Vs Customer Retention – Should You Focus on Acquiring More Customers or Retaining Your Current Ones?

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