E-commerce Marketing is a field that allows you to use your skills to guide a business to new roads of success. To nurture a business and let it trace the higher roads of growth, the key is to draw in customers. All the efforts that are made by the marketing team, the advertising team, and even the production team of a product or a brand are to get as many customers as possible.
In the journey of a business, countless customers come in, at the same time, many customers even leave the brand. So the question often remains, what is more important, to focus on drawing in more customers or to focus on retaining your old customer base? This question is even more important for e-commerce brands due to the cut-throat competition that exists within this industry. This makes it imperative for e-commerce brands to tread cautiously along the fine line that exists between customer acquisition and retention.
So, in this article, we shall be looking at the different aspects of building a clientele and finding out which path shall benefit you more, customer acquisition or customer retention, or if you could prioritize only one of them.
Why Is Customer Acquisition Important?
If you go through the success stories of some of the most popular world leaders or businessmen who have built empires from scratch, you’ll learn one basic lesson in common from each one of them. You’ll realize how they’ve given importance to adding new prospects to their sales funnel, all the time.
If you ponder upon it for a while, you shall realize that when you’re adding more customers to your clientele, you’re letting your e-commerce business grow. Every other step you take at maintaining the relationship with your customers and clients is about maintaining your growth. But to achieve new heights on the never-ending ladder of success, you need to keep growing, even if a few leaves fall off.
You Will Lose Customers- Inevitably!
ProfitWell recently presented a study from which they concluded that every business no matter how big or small has an average churn rate of 4.8%. Customer churn means the number of customers you lose regularly in your journey of growth. No matter how hard you try, the cycle makes you lose an average of 4.8 % of customers at all times. Hence, to compensate for your loss and to keep growing, you need to keep adding more and more customers to your sales funnel.
The most successful business owners have one thing in common, which is their strategy for growth. They make a growth strategy that is well-timed and is supported by the right number of employees working together to achieve a goal. Customer acquisition is a goal that cannot be achieved in a day, it requires an optimum amount of workforce and a well-planned strategy to be accomplished.
To function better at customer acquisition, a company needs enough resources to be able to serve its new clientele satisfactorily. The better a company serves its clients, the easier it is to accomplish customer retention.
Why is Customer Retention important?
Imagine you work hard to add 5 new clients to your clientele and lose three clients at the same time. Your hard work that roped in 5 clients produced an effective result of just 2 new clients. But if you follow the right strategies, you’d not just be able to add five new clients to your clientele, but also keep the three old ones, giving you a success rate of five.
Your Existing Customers Will Bring In A Bulk of Your Revenue!
Any e-commerce business owner worth their salt will tell you that the bulk of their revenue is generated by just 20% of their customers. Also, the resources that go into roping in a new customer are almost five times the resources and the efforts that go into retaining an old customer. Hence, with the efforts that you put into getting a new customer, you could retain five of your old customers.
Also, by paying attention to and working towards customer retention, if you accomplish even a five percent increase in customer retention, that may translate into an overall profit of nearly 25-95 percent. Moreover, the possibility of selling your product to an old customer is 60-70 percent higher than selling it to a new one, which is 5-20 percent.
So, Customer Acquisition Vs. Retention: What Should You Focus On?
The answer is simple- focus on what is better suited to your business model. If your e-commerce business is dependent on repeat purchases like many software subscription models, you should allocate a lion’s share of your marketing budget to customer retention efforts.
On the other hand, if your customers need your product or services infrequently, you will need to bring in new clients in the lulls between purchases from your existing customers. Customer acquisition should be prioritized in this case.
Suppose you’re fortunate enough to have a crazy fan base that will latch on to all your products in no time, you can focus almost all your resources on customer acquisition. However, it would be wise to include certain metrics in your analysis that gauge your existing customer loyalty.
Remember, the more loyal your customers are, the higher will be your chances of retaining them, thereby, allowing you to focus more on acquisition.
Customer acquisition and customer retention are the two ropes that run parallel and that shall help you climb to new heights of success. A lot of times it is debated if customer retention is more important than customer acquisition. While you can certainly try to strike a balance between the two, the key lies in identifying which one is more important to your business.
Consider carrying out a monthly or quarterly audit to determine what your core metrics are, what you are doing to move the needle and whether your budget is well allocated. This will enable you to be more agile at quickly adapting to what is working for your e-commerce business and what isn’t.
In case you’re still confused about how you should go about allocating your resources to e-commerce customer acquisition and retention, you can sign up for Wigzo Free Trial today for powerful marketing automation.