In a nutshell, both have to happen in the right balance: tilting too much towards one or the other may be uneconomic. And there has to be a lot of Engagement activity because that may be the only differentiator in the medium term.
You will have heard that “it is x times more expensive to acquire a new Customer than to retain an existing one”. I used to ride on this fact or myth for a long time because it seemed -instinctively- true. But does it remain true today? Are there particular circumstances that leave room for doubt?
In the background, you have COVID or post-COVID. It is true that a lot of organisations have accelerated their digital presence and Consumers have responded by shopping a lot more online (see one of many analyses/opinions in Forbes
That has generally made acquisition easier; or maybe it has made the transaction easier and the ‘loyal’ Customer definition is a bit vaguer.
Then one has to look at the growth stage of an organisation to understand the situation better. If a company is a start-up (or wants to function as one) then the choice is simple: acquisition. The issue is that few companies can scale at the same pace after they realise that they need to do something about retention. Retention that is not built into the business model can become expensive to implement later.
A good example is subscriptions to digital news: Consumers who love your content will buy a subscription instantly and growth is dazzling; after a while you have to deal with a situation where you lose as many subscribers as you acquire as there are a lot of Consumer choices. In this industry Acquisition and Retention and Engagement are necessary all of the time.
Here in Australia, the big Banks are offering borrowers cash to refinance their mortgages. This is a situation where it may be more expensive to acquire a Customer for one Bank or more expensive to retain one for another or even both. With Open Banking it may be that Consumers become accustomed to this model and all the actors have to find different ways to differentiate themselves. But is it that simple? Perhaps Banks are thinking the only way for interest rates is up and their approach is longer-term.
Where to now? Looking at known Customer touchpoints is an important checkpoint:
- What is your campaign activity mix? Is it more towards acquisition? More towards Retention? Are the contacts labelled so a reviewer can tell?
- Do you have different engagement regimes for offline or online touchpoints? Mobile versus desktop? What does the contact intensity or differentiation look like from a Customer perspective?
- What is your timeframe for results? If it is short-term (like a new media platform) or longer-term (like a Bank) that will also play a role.
Acquisition vs Retention, Online vs offline engagement, short vs long term — these are 8 scenarios we can help you understand. These scenarios have been around for a long while in omnichannel marketing but the answers are not as straightforward as they used to be.
Written by Yorgos Moschovis – yorgos.moschovis@digitalalchemy.com.au