Customer Acquisition vs Retention

Which is better, customer acquisition or customer retention? That is quite deceptive : both are essential for long-term growth and stability.

Mostly, businesses concentrate their resources and time working on acquisition. Efforts to enhance retention are frequently put on the back burner or completely ignored. In reality, for certain business models, retention offers a much higher ROI on advertising spend and is frequently much more cost-effective than its counterpart.

Which aspects of marketing should you prioritize? Let’s look into the specifics of customer acquisition and retention. 

What is meant by “customer acquisition”?

The process of convincing potential customers to buy your products is customer acquisition. A solid customer acquisition strategy generates leads, enriches them till they are prepared for sales, and converts them into customers. Your customer acquisition cost is the total cost of these steps.

What is “customer retention”?

The capability of a company to convert customers into returning customers and prevent them from switching to a competitor is known as customer retention. It demonstrates whether your quality of products and services satisfy your current customers. It is also the backbone of the majority of subscription-based businesses and service providers.

Similarities between Customer Acquisition and Retention

While customer acquisition and customer retention are distinct, they share many similarities in terms of what they accomplish and require. Both focus on providing a positive customer experience and generate revenue for a company.

Let’s look at some of the key similarities between these two concepts and how they both necessitate careful planning and significant effort on your part.

Customer Acquisition and Retention Drive Growth 

One of the most striking similarities between customer acquisition and retention is that both aim to grow a business and its revenue—through customers.

There would be no business without customer acquisition. However, without customer retention, a business becomes unsustainable. Acquisition helps to grow a business by bringing in new revenue and expanding the customer base, whereas retention helps to grow a business by creating stability and generating predictable, ongoing sales. Customer acquisition and retention both contribute to the growth of a brand’s reputation. Acquisition raises brand awareness through the use of content marketing and advertising, whereas retention’s goal of keeping customers happy leads to the development of a positive reputation through word of mouth and reviews.

Acquisition and Retention Each Require Strategic Planning 

Another similarity between customer acquisition and retention is that both require strong strategies to work. And neither strategy will be effective unless you understand your target audience.

Customer acquisition is dependent on careful planning for how to reach out to prospects and warm up cold leads. You must conduct market research, understand your unique selling proposition, and articulate what problems you solve and for whom. All of this will inform your outreach strategies, such as content marketing and advertising.

Neither works in the absence of consistent branding

Customer acquisition works when businesses’ branding, values, and guarantees are able to resonate and connect with their target audiences. Similarly, businesses can only keep customers if they live up to the brand’s promises

If branding is inconsistent or customers believe they have been subjected to false advertising, it is a strong incentive for them to abandon a brand in favor of another. Having consistent, strong, and clear branding that extends beyond the checkout page is critical for acquiring new customers and retaining existing ones.

This is especially important when it comes to following through on any claims made about your brand or product. If you make a promise to attract customers and can’t back it up, you won’t keep them. 

How Customer Acquisition and Retention are Different 

Acquisition is more costly 

Statistical data differs by industry, but research has found that customer acquisition is significantly more costly than customer retention. It can cost nearly five times as much to acquire a new customer as it does to retain an existing one.

Whenever it comes to new customers, keep in mind that you are starting from scratch. They are unlikely to have prior experience with your brand and may even distrust your company. It will take time and effort to pique their interest in your product, and even more time and money to persuade them to purchase from you. You don’t have to overcome as many transactional barriers with existing customers.

The ROI on retention is higher

The initial costs of customer acquisition render many business-customer relationships unprofitable. These relationships may not generate significant returns for months or even years after strong retention processes are in place. According to one study, a 5% increase in retention rates can result in a 95% increase in profit.

The point is that a customer grows in value over time, and a strong retention strategy will allow you to keep your current customers for a longer period of time.

Most businesses prefer customer acquisition, This is why: 

Acquisition boosts vanity metrics

Customer acquisition campaigns frequently produce eye-popping numbers: more visitors on the page, more daily active users, and so on. Marketers can easily point to such figures as indicators of success. Vanity metrics, on the other hand, look great on the surface—but they don’t provide any actionable insights into future strategy.

The outcomes of acquisition campaigns are more visible

Customer retention is a lengthy process with results that can take years to manifest. Acquisition campaigns, on the other hand, provide quick and easy measures of success. For example, “new users” is a straightforward metric that can be seen right away. In essence, many businesses treat customer acquisition campaigns as the marketing equivalent of “instant gratification,” without pausing to consider whether they are the best use of funds.

How Marketers Are Using Online Channels For Retention Or Acquisition

Online Marketing ChannelAcquisitionRetentionBoth Equally
Paid search86%2%13%
Online display advertising85%4%11%
SEO (natural search)66%6%28%
Web retargeting61%22%18%
Mobile web52%18%30%
Mobile and web push notification34%39%27%
Social media marketing31%28%41%
Mobile apps30%44%26%
Mobile messaging23%58%19%


Focus on improving customer retention if you want to grow your business in 2023 and beyond. This might require some time, but you’ll generate a flywheel effect with Vispan Solutions, in which every new and existing customer adds more value and growth to your business over time.