How to use customer acquisition and customer retention to boost business growth

Wed, 22/07/2020 - 16:28

When we talk about customer acquisition, we’re referring to all activities that a business does to attract new customers. This includes the sale of products and services, as well as the marketing and advertising of products and services. 

On the other hand, customer retention speaks to current customers; an approach to keep existing customers buying or using your products and services. One of the defining factors for customer retention is brand loyalty. And that doesn’t come cheap. It’s often two-fold and achieved through carefully designed customer experience (CX) strategies. 

Now, you’re probably wondering if you should focus on customer acquisition, customer retention or both? Some marketers, depending on which marketing agency in South Africa they’re from, will rate the importance of customer acquisition over customer retention, but investing in both to achieve a balance will benefit your business in numerous ways. 

Customer experience is the glue 

At the centre of both these approaches is customer experience (CX), which refers to how a customer experiences a brand as a whole. In our recent Digital Customer Experience for South Africa report, we take a deep dive into the role that CX plays in the growth of online businesses. The report, which is done in collaboration with industry leaders, looks into the urgency at which businesses need to adapt to the expectations of customers. Particularly, during unpredictable times such as these under the coronavirus pandemic. 

If you’ve been throwing a strong marketing budget towards customer acquisition, you are possibly certain that you’re distributing your resources efficiently, and that you’re delivering good experiences to your customers on a consistent basis. However, a recent study by PwC

for the ISBA in the UK found that only half of programmatic advertising spend reaches its intended audience. In a South African context, this suggests that brands are wasting over R1 billion on failed acquisition. This is money that could perhaps be better spent on building a better understanding of existing customers, on fostering loyalty. 

Customer experience professional, Julia Ahlfeldt, explains that; “it’s no use throwing money at acquiring new customers if they don’t stick around, or worse, they become vocal detractors.” So, what is the answer to this conundrum? Customer experience. 

As stated in our report, building an optimal customer experience will increase a brand’s average revenue per customer. Not only that, but it will also create a motivated base of consumer advocates whose active endorsement of your brand will be far more authentic than your own sales team’s rhetoric.

Now that you know how to improve customer retention and attract new customers, here are actionable steps to take: 

Build a quality customer experience 

Consumers believe in a quality customer experience over the price of your product or service. Put simply, if a customer visits your ecommerce website and the website is taking too long to load (three seconds is Google’s recommended loading speed), or the shipping price is too much, they will leave your website for your competitors’. Those are called friction points, and any reliable ecommerce website development agency will tell you that this kind of experience is less appealing. So, it’s ideal to make small improvements to your CX, which will improve checkout rates and bolster profits. Once this is done, consistently dig into your analytics data and run experiments across audience groups to identify behavioural differences and triggers. From there, improve accordingly.

Embrace the omnichannel approach 

Customers use a multichannel path to buy from a business. It’s for this reason, that if your business is available on all touchpoints, offline and online so that your physical brand and online brand co-exist in harmony. What you can do is to regularly refresh your product and service descriptions, ensuring they are authentic and accurately represent what’s on sale. You can also fix any website and app speed issues. Lastly, focus more effort and resources on the experience after purchase to keep the customers that you have acquired. 

Improve service delivery

We’ve found that the primary causes of consumer disappointment include a combination of high delivery fees, items being damaged in transit, and delivery taking too long. All of these impair the overall customer experience and may cause customers to lose trust in your brand altogether. Grocery delivery app founder, Vutlharhi Valoyi of Zulzi, offers a 60-minute delivery service that attributes his company’s growth to meeting promised timelines. “Customers want accurate delivery windows and the ability to have clear visibility during the shopping process.”

This means your business has to improve on service delivery. You’ll have to start by understanding the needs of your new digital converts. Move on to mapping out their journeys and design journeys that will help retain these customers in the months and years to come. 

You also have to ensure that inventory management systems are aligned to highlight out of stocks automatically.  

Use advocacy opportunity to your advantage 

Out of the people surveyed from our report, 75 percent stated that they would share

news of their positive experience with friends and family, while 43 percent said they would post about their experience on social media. In addition, a full 42 percent said that they intend to buy more from a brand that pleases them.

What this shows us is that experience elicits action, whether it’s good or bad. Your goal is to be on the good side, so you need to deliver good experiences to your customers if you want them to advocate for your business. You can do this in many ways, but the first action is to understand your customer’s journey. Measure, monitor and manage this to ensure you are delivering on your promise, especially after the customer acquisition. 

Final thoughts 

If your goal is to get new customers and retain existing customers, you have to create a balance between the two. Ask yourself what is a customer retention program that will best suit your digital business’ needs and explore that. And to increase your chances at success, speak to a digital marketing agency that not only understands content marketing but also the benefits of customer acquisition and customer retention like us here at Rogerwilco

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