If you want your business to grow, do you focus on customer acquisition or retention?
It doesn’t matter if you’re in the startup phase or have years’ worth of longevity, you should always be working toward increasing your market share, right? But how do you accomplish this? Do you focus finding new customers or keeping current ones buying?
Acquiring new customers is every business owner’s goal. The benefits include:
- increased revenue
- a wider customer base (and if you’re attracting the right folks)
- higher average order spend
As bootstrap business owners, we’ve got options: we can do no-cost activities like writing blog posts, cold calling and recording videos that provide value to your target audience. When budgets allow, consider running ads on social, hiring a sales team, direct mail and hosting events in order to attract new people to can introduce products and services to them.
If this sounds time-consuming and expensive…it is. But most new businesses focus on acquisition first because, if people stop buy your stuff your business won’t exist for too long.
According to a Harvard Business School study, a 5% increase in customer retention can lead to an increase in profits 25%-95%. Consider a retention-driven strategy because:
- current customers are more inclined to try your new product
- higher probability of selling
- current customers will become your advocates
Just like with acquisition, there’s options. You can include handwritten notes with every order or step it up in the customer service department. Another free option like naming your audience to foster a sense of belonging can go a long way.
There really isn’t a “best” growth path, the key when deciding on customer acquisition or retention is not completely abandoning one focus for the other. To do so risks alienating future potential sales, or as we’ve seen with brands like SheaMoisture, you could strain the loyalties of your diehard fans.
To be successful, you’ll need to do both…the trick is figuring out when the shift priorities…but you’re an entrepreneur, you can do anything. 🙂