Customer acquisition and retention
Customer acquisition and retention is a broad field which encompasses all of the sales, marketing and client relationship management practices of a business. In the broadest sense, customer acquisition and retention is the most essential business practice, as it creates and maintains revenue streams and allows businesses to continue to function. When a business struggles to acquire new customers or fails to retain existing customers, they will be unable to meet their operational expenses and will eventually become insolvent.
How can a business acquire new customers?
Businesses have a huge number of options available to them to attract new business, and typically a sales and marketing strategy is created to determine the precise mix of avenues and tools which a business will use to get noticed and create sales. In putting together a sales and marketing strategy, it is necessary for businesses to undertake marketing research to gather the data required to make a plan which is effective. Without market research and a sales and marketing strategy, customer acquisition is likely to be more wasteful and less effective, increasing the cost per sale and diminishing profitability.
The most common customer acquisition practices include:
- Traditional advertising
- Digital advertising
- SEO and pay-per-click
- Direct marketing techniques
- Creating a sales funnel
- Utilising sales people
- Public relations
Many businesses utilise new and innovative strategies to acquire new customers, and there is no one-size-fits-all approach. The most important consideration is to simply remember that customers do not choose a new product - they move to it from something else. This means that successful businesses need to demonstrate real value to motivate the change in provider.
How does a business retain customers?
Marketplaces change over time, with new businesses entering, new products being developed, new technology being introduced and new demographics becoming involved constantly. This means that businesses which stay the same will eventually be beaten out by a competitor who devises a way to deliver the same value more cheaply, or to deliver greater value at the same price point. Therefore the most logical way to retain customers is to continually develop the business by exploring opportunities to grow and add value, and consistently implement processes to eliminate waste and minimise expenses, thereby allowing the product to be delivered at the best possible price.
The other side of this practice is the human side. Consumers are not purely rational, and their decisions are often based on emotions and attitudes which are not necessarily grounded in hard facts and logic. The most important factor in this consideration is the relationship a consumer has with a particular business. The relationship is a function of the business brand, the customer service and the product quality. By creating a meaningful relationship, businesses can inspire loyalty and an emotional connection to the product which assists in customer retention.
In modern marketing and brand development, consumer identity is considered a key factor in the adoption and retention of new customers. This approach revolves around creating a brand which stands for something that consumers want to align themselves with, whether the brand choice tells the world they are fashionable, environmentally conscious, forward-thinking, socially aware, ambitious or something else. Brands that project a particular identity which consumers find desirable typically retain their customers more easily.