What’s more important, customer acquisition or customer retention?
Most beauty and personal care brands focus on getting more new customers (customer acquisition) and that is slowing you down.
Let’s quickly get the definitions out of the way first:
What is customer acquisition?
Customer acquisition is getting more new customers with first time orders.
What is customer retention?
Customer retention is getting more repeat customers with repeat orders.
Customer acquisition is important – because your business can’t grow without more new customers.
But the problem is when you don’t have a customer retention strategy, you are wasting a lot of money.
Because when you acquire new customers, you spend a lot of money on them:
- Customer support
- Refunds and Returns…
And they rarely come back to buy again, which means shrinking profit margins and slow growth.
While focusing on customer retention helps you grow faster – because it doesn’t cost much to bring back a customer and they even spend more with you.
Harvard Business Review found that a small increase of 5% in customer retention can increase your revenues by 25-95%.By Frederick Reichheld of Bain & Company (Inventor of Net Promoter Score)
More repeat customers at lower cost, who spend more with you and refer their friends is really the ultimate growth strategy.