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Why Keeping a Customer is More Important Than Attracting

Date published: May 30, 2016
Last updated: May 30, 2016

For many years, digital marketing professionals have faced a common problem: Is it worth it to take the easy route? Here the question lies, of course, on whether to resort to the method of mass mailings to potential customers or rely on a massive presence in banner networks and contextual advertising. We hope that you choose another option, which is also a cheaper one.

Effectively allocating marketing budget is not a very easy task. How should one invest money in order to get the maximum returns? How, then, can he prove that money spent is not wasted? (Here meaning primarily not just the statements but rather building a budget strategy.) Modern marketers are very concerned about this issue.

First, it is necessary to make an important decision - should one invest substantial amounts of money to attract new customers, or should he better focus on retention and elaboration of an individual approach to the already existing ones?

So What Should You Do: Retain or Attract?

To better grasp the essence of the matter, let’s first examine what marketers are doing now.

The classic attraction lies in expanding the customer base by attracting new users. Agree that you are unlikely to sell anything at all if no one visits your website.

In marketing, this approach is defined as "activities aimed at attracting potential customers by convincing to visit the company's website and their further conversion into actual customers that generate revenue".

The acquisition of new customers helps boost sales because the more potential customers you attract, obviously, the more will be able to sell. Many people call this strategy"conventional marketing," forgetting about its reverse side, namely customer retention.

According to our data, the average Churn Rate in online stores is approximately 80%. That is, the vast majority of customers buy only once and never come back.

Even now, when the difference between the classic marketing of growth and the services (the sales) is not very noticeable, many marketers say that it is more important (and also, easier) to attract new customers rather than to try building and developing relationships with the most valuable and loyal customers from among existing ones.

Have a look at what other players in the market do, and you'll see a faded interest in attracting new customers. The money for that is spent at the expense of funding for the retention of existing customers.

It’s time to emphasize the importance of increasing spending on customer retention.


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Let’s Look at Some Examples

Seller X has been quite successful selling clothes on the Internet. He advertises the goods of a well-known brand using Google and social networks. The apparel market is very competitive. When customers are looking for products, they are guided by the prices which can be easily compared, not forgetting about the availability of multiple price aggregators. Sixty-two percent of customers will never come back to purchase at the same store. Also, only 16% purchase more than 3 times at the same store.

With considerable expenditures on advertising and a small number of regular customers, the cost to attract new customers is increasing dramatically. Assuming that advertising expenditures remain at the same level, the seller will need to sell a lot of pieces of clothing if he wants his profit to amount to the desired ROI.

Let’s Move on to the Arguments

Let's assume that Seller X sells most of his clothing to his existing customers. Then his profit will increase because he will no longer have to splurge on attracting new customers.

When using the customer retention method, the desired level of income can be provided by much lower sales volumes. Moreover, according to the research done by Frederick Reichheld of Bain & Company, such an approach is more likely to help reduce administrative expenses and increase profits.

Consequently, Seller X will be able to reduce prices in his store, and his customers would also benefit.

We believe that a good digital marketer is, first and foremost, the seller. And here's a good example of the real impact of the work of the marketer on a company's efficiency and profitability.

Reasoning thus, it is easy to see that, by focusing your efforts mainly on customer acquisition, you are actually working for your competitors, who offer their customers a more personalized approach and do everything for their retention.

Customer Retention is Our Choice

If you're already running the company, then chances are that the sales within the existing customer base will ensure you a cheaper and faster business growth. We are not saying that you should completely give up campaigns to attract new customers. But focusing on potentially existing customers is unarguably essential.

Here you can find an eBook with 2 real case studies on how to increase profits focusing on customer retention.

If your company is a start-up, then, naturally, you should first create a customer base and then, as it increases, proceed to the process of building customer retention campaigns.


If you are going to use analysis based on the"sales funnel" model (Sales Funnel - the principle of customer distribution at all stages of the sales process from initial contact to deal closure), you should be careful not to get over-focused on attracting new customers. You will find that most of your customers will be concentrated in the first part of the life cycle (inactive or leaving customers) and in the center (loyal customers), and at the bottom (new customers), there will be much less of them.


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