The Balancing Act Of Customer Acquisition And Retention: A Guide For Startups
Starting a business can be a thrilling yet arduous task and there are myriad complications and hurdles that one can face at every step of the way. Once a business’ foundation has been laid, which in itself is a mammoth achievement, entrepreneurs face the uphill task of acquiring new customers and retaining them. There are various conflicting opinions in the business world about which is the more important process, especially for nascent ventures like startups. In reality, it is less of a competition and more of a balancing act. On a day-to-day basis, it is essential to walk that fine line between both processes, especially since each one holds immense value for a company’s long-term growth and sustainability.
For any startup, your customer or client sits at the heart of everything you do. Therefore, it's no surprise that more than 80% of companies around the world spend big money on acquisition, driving up CPAs considerably over the last five years. Acquiring new customers is a crucial goal for any business to kick-start and grow, however for it to thrive - that's where retention comes in. With retention, the focus shifts from how many ‘installs’ to how many ‘returns’. Retaining a customer can be six times more cost-effective than acquisition, and statistically, it's proven that about 31% of existing customers on a platform spend more money than new ones. Therefore it's safe to say that while acquisition places emphasis on quantity, retention maintains the quality and for any new business or startup both aspects are vital.
In that regard as a founder of a fitness startup in an extremely competitive ecosystem, below are a few key acquisitions and retention strategies through which small businesses and startups can effectively scale up their presence.
Customer acquisition strategies
1. Know your Audience
As fundamental as this may sound, knowing who your product or service could potentially benefit and defining that target audience, whether by demography or location, is a crucial step that sometimes can be plagued by generalizations. Identifying the right audience to target, can help craft a more customized campaign and inevitably curb resource expenses. This can be especially helpful for startups that are already spread thin when it comes to manpower. Discovering a focused audience base can also help startups and companies identify ideal marketing channels and create specific social media content in order to acquire these desired customers. This first step will prove to be extremely valuable in creating long-lasting, mutually beneficial relationships with your customers.
2. No Channel Surfing
Marketing in the digital space offers a plethora of opportunities to reach out to target groups and audiences. However, as brands get savvier with their digital skills, customers are getting a little bit more fatigued by lackluster, or on the other end of the spectrum, excessively persistent efforts. Therefore in that regard, if knowing your audiences is important, understanding the right channels to use to acquire them is the second of the same coin. Companies and startups can use several channels such as email marketing, organic marketing, and affiliate marketing to make inroads into a competitive space. These processes are further bolstered by the use of social media; promoting marketing content in social media groups and communities, running engagement ads to push sales, remarketing to audiences that liked your content and visited your website, etc. are all strategies that can be employed to acquire new customers. However further fine-tuning your strategy to identify specific channels can prove to be more effective and drive more efficient results.
3. Referral Programmes
More often than not, your own customers can prove to be the best brand ambassadors, especially when it comes to their community or social circles. Think about the last time you organically searched for a product or service and started using it - who was at the beginning of that acquisition journey? either a friend or a family member or even an acquaintance. Referral programs are a great way to incentivize your current user base to pull in newer audiences through discounts, added features, or even freebies. Taking it one step further, these referral programs can even be leveraged through influencers or specific tastemakers within your targeted audience. While it may be a fairly rudimentary tool, it gives potential customers access or awareness to your brand through sources that they trust and relate to.
Customer retention strategies
1. Engage and Re-engage
The ability to mold a deeper connection between your brand and the customer starts right at the beginning of the user journey. Here, the key to forming that connection is engagement - the more engaged the customer is, the more likely he or she will keep coming back for more. Repeat customers are the ones that are driving your revenue and at the end of the day, they are the ones making a longer commitment to your brand. Using tools and tactics like video content, gamification, social interactions or personalized communication, feeds engagement, and creates an ongoing conversation that tells these customers that they are important, heard, and taken care of.
2. Provide standout customer service
Good customer service can be the backbone of any business, whether small or large. It is no secret that happy customers are vital to a business’ survival in a competitive global market. Countless case studies point to the fact that companies who provide exceptional customer service often have an edge and successfully maintain a loyal customer base. Several companies have implemented 24x7 customer service during the pandemic in order to cater to customers’ queries as lockdowns prohibited people from visiting stores etc. Such mechanisms have proven themselves and led to increased customer satisfaction and higher customer retention rates.
3. Formulate customer loyalty programs
Rewarding devoted customers with loyalty programs and perks can help immensely with customer retention. Research shows that giving status symbol titles to customers such as gold members or platinum cardholders helps increase customer loyalty. Loyalty programs pander to the basic tenets of customer psychology i.e. they make the consumer feel special, heard and noticed, and are therefore valuable tools to ensure customer retention.
In a nutshell, while entrepreneurs and small business owners have to walk a tightrope to ensure the perfect mix of retention and acquisition, the strategies for the two have their own dynamic structures as well. Therefore it's imperative to invest time, energy, and resources towards building this framework in order to ensure the maximum success rate of any business.
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