Customer Acquisition and Retention: Which Is Better for Your Business?

Whether to acquire or maintain customers is an age-old question that has baffled CEOs, marketing executives, and business owners for ages.

Fortunately, the solution is much easier than you think.

Both customer acquisition and retention strategies, including chatbots, targeted email campaigns, social media post calls to attend free webinars, promotional discount sales, and content marketing, all help improve your company’s marketing potential.

Remember that if the customer comes first, they will last.

Let’s explore customer acquisition vs retention to determine which is better for your business.

What Is Customer Acquisition?

Customer acquisition refers to the strategies and platforms that add new leads to your customer database and converts them into buyers.

An excellent customer acquisition policy focuses on sustainable and flexible practices and an outstanding customer experience. The aim is to acquire the customers at the lowest cost possible. 

In customer acquisition, you may focus on strategies like:

  • Reducing operating costs by prioritizing the most qualified leads. It, in turn, increases the return on investments.
  • Improving your company’s bottom line by identifying new opportunities.
  • Increasing your client base through social media and other channels.

Customer acquisition is an ongoing long-term strategy that calls for mutual collaboration between departments, including sales, marketing, and customer care.

One excellent way of acquiring customers is using content marketing that leverages SEO. This method will help you generate high-value leads that you can then push through the sales funnel.

What is Customer Retention?

Customer retention refers to the activities and platforms you can use to maintain existing customers and turn them into repeat clients.

Here are some benefits of customer retention policies to a company.

  • Customer retention is cheaper than customer acquisition. You can raise your profits by 25 to 95% if you increase customer retention by only 5%, and converting a regular client is 12 times easier than converting a new client.
  • Repeat customers spend more than new clients over time.
  • Regular customers provide more detailed and actionable feedback that can help your brand grow faster.
  • It takes less time to convert existing customers than new clients. Your old customers understand your brand and may just need a slight nudge to convert, while a new client may be more skeptical of your products or services.
  • Word of mouth referrals from loyal customers is more beneficial than other Ad strategies. Due to better targeting and increased trust levels, word-of-mouth advertising attracts higher quality leads resulting in increased sales and profits.
  • Brands that focus on customer retention strategies stand out from the pack with loyal clients who are more forgiving and receptive to marketing campaigns. Email marketing is also an effective retention strategy. 

When is customer acquisition more important than customer retention?

Both customer acquisition and retention are critical to the growth and success of your business depending on your business model, stage in business growth, and the products you sell.

Here are a few instances where customer acquisition is more important than customer retention.

  • New businesses do better with customer acquisition since they have a smaller client base. Small companies and start-ups with limited budgets can leverage tools that have market automation to reduce human engagement, save costs and reach more clients.

    As an example, User provides a simple drag and drop function so you can set up your marketing automation instantly with no code involved. 
  • Increase your brand awareness, especially if your business is local. Small businesses that are geographically bound can get more exposure by targeting regional and international clients. Such marketing strategies will increase your company’s visibility and increase sales.
  • The market acquisition strategy is easily measurable and provides a base for collecting actionable business data. You can track how much revenue new clients bring to your company and the relationship between acquisitions and business growth.

When customer retention is better than customer acquisition

It’s a fact that most businesses focus on customer acquisition rather than customer retention.

But could these companies be missing a big slice of the pie?

The numbers don’t lie, and the advantages of focusing on market retention outweigh customer acquisition.

Customer retention is cheaper than customer acquisition

Customer retention is 5-25 times cheaper than acquiring new customers, depending on the industry.


It’s cheaper because existing customers understand your products or services better compared to a new customer.

Additionally, product remarketing is cheaper and more productive compared to Ads that target new clients.

Other reasons to focus on customer retention include,

  • Time savings. Since you’re contacting customers already in your database, you don’t waste lots of time chasing viable leads.
  • Higher chances of success. It’s easier to convert a client who has experience using your products or services than a new one.
  • Customer retention has a higher ROI compared to customer acquisition because you spend less on retention marketing.
  • Return customers spend more than first-time clients because they trust your business.

When to focus on both customer acquisition and retention

Using customer acquisition and retention strategies is a smart move to capitalize on your old and new clients.

  • You should focus on these two marketing strategies if you have a big enough budget. Advertising is expensive, and if your budget is constrained, it would be wise to concentrate on either one of the two strategies that make the most sense for your business at the time.
  • Focus on the two strategies if you want to increase your revenues. Both these marketing strategies are meant to spur your customers to make purchases. If you need to increase profits, invest in both approaches.

Final Thoughts

Customer acquisition and retention are critical marketing strategies for any business. These two strategies increase sales, improve company bottom lines, and aid in the growth of the business.

Which marketing method to use depends on a company’s size, financial targets, advertising budget, and size.

Customer acquisition is perfect for new businesses that are just starting and have a small client base. In contrast, increase your customer retention efforts if you’re an established company with an extensive, loyal client base.

Suppose you choose to invest in both customer acquisition and retention. In that case, marketing automation tools like chatbots to engage new users or event triggers when a user takes a useful action will grow your business effortlessly.Book a demo to see how User can help automate your marketing workflow today.