The Customer’s Dilemma: Acquisition vs. Retention

In last week’s post, I wrote about the acquisition versus retention “dilemma” from the marketer’s perspective. Obviously, there are two sides to every story, and the customer’s version is the most important side of this story.

How this dilemma affects customers

It’s no secret to customers that companies spend more time, effort, money, and other resources targeting new customers than on keeping existing customers. (AT&T even demonstrates this in one of their recent commercials.) New customers get better prices, amazing deals, and the royal treatment, while those who’ve been customers for many years feel like they don’t matter.

Unfortunately, this dilemma is well known. How does it make customers feel? Not so good, right? Not appreciated, not special, and certainly not valued.

And yet, while it’s no secret, it continues. And what it causes customers to do is to play the “discount game” or the “I’m a dissatisfied customer game” in order to get a better deal. Some companies even encourage customers to call back every year to get a “loyal customer discount.” (My internet provider does this.) And customers are left thinking: Why don’t they just give that to us? Why make us remember every year that we need to call to get the discount? Why not treat us all the same?

Should long-term customers really have to do this? Why not treat them better to begin with! Shift some of the focus and the budget that’s on the Buy phase, on new customers, onto the Own phase, on long-term customers. Show appreciation for loyalty. Listen to them. Hear their needs. Make improvements to the experience to ensure that they’ll be customers for years to come.

In the end, it takes some pressure off marketers during the Buy stage!

Outcomes: what it means for customers if marketers focus on retention first

Retention is about more than discounts and loyalty programs. When brands focus on retention over acquisition, not only will existing customers get the same or better deals than new customers, they will also reap the benefits of a retention strategy; in other words, they will have a better experience: companies will listen to them, follow up with them about their feedback, make improvements based on their feedback, map their journeys and identify pain points, fix the pain points, make the experience effortless, communicate consistently, deliver seamless omnichannel experiences, and more.

Outcomes: what it means for your business to focus on retention

Focusing on retention by delivering a great customer experience means that companies need to spend less on expensive marketing initiatives, Super Bowl-sized ad campaigns, and rebranding efforts, with less focus on competitive pressures, sales efforts (customers sell for the brand), and price (fans are less price-sensitive).

Focusing on plugging the leaking bucket saves a lot of money. Robert Stephens, co-founder of Geek Squad, says: “Advertising is the tax you pay for being unremarkable?” It’s such a great quote because, if brands deliver an excellent experience for customers, then customers will spread the word for these brands. If they fail to deliver a great experience, brands will be spending more on advertising to get the word out on their own. (Know that customers trust recommendations from their friends over brand advertising!)

92 percent of consumers trust recommendations from others, even people they don’t know, over branded content. ~ Adweek

Being a brand with a consistently-great customer experience means the company can put more focus on current customers, on keeping them – and not on acquiring new customers. Why? Assuming a current customer loves the brand, has had nothing but great experiences, and is a true fan – an advocate – he will work for the brand. As a result, the brand doesn’t need to spend massive budgets on advertising and marketing; the experience speaks for itself. And brands will benefit from some other cost efficiencies, as well.

The economics of loyalty look like this. A brand’s most loyal customers, i.e., their advocates, their raving fans:

  • Want to see the brand succeed and grow
  • Are happy to provide feedback, good or bad, to ensure that that success happens
  • Are less price sensitive
  • Will pay a premium for a better experience
  • Stay longer, spend more, churn less
  • Expand their purchases/relationships to other/new products or services the brand offers, increasing their customer lifetime value (CLV)
  • Are more likely to be using several products/services, not just one
  • Choose the brand over the competition
  • Can’t live without the brand and accept no substitutes
  • May overlook product shortcomings
  • Are more likely to forgive occasional/infrequent service shortcomings (just make it right, though!)
  • Cost less (e.g., marketing, advertising, promotions)
  • Have fewer complaints
  • Require less support because they are familiar with the brand’s products
  • Become technical support for the brand by helping other customers (answer questions, solve problems)
  • Are advocates or, even stronger, evangelists, spreading the word about the brand – word of mouth is free and the most credible form of advertising
  • Wear the brand, even tattoos, and want to show that they are part of something bigger than themselves
  • Wait in line – long lines, early morning lines – to buy the brand’s products
  • Openly recruit new members to the community
  • Elevate the brand, affording it favorable placement in stores and more


If existing customers are treated well, if brands support them through the ownership portion of the customer lifecycle, they will reciprocate and support the business.

First impressions, last impressions

First impressions – everything from truthful advertising to the greeting at the door or how the phone is answered – are important. If the brand makes a great first impression, that’s a strong start that puts the brand well on its way to delivering a great customer experience.

So, focusing on the Buy phase is important; there just can’t be a disproportionate focus on this phase.

Last – and often lasting – impressions are formed during the Own phase. Design an experience that keeps customers and keeps them coming back. Appreciate customers for their business.

The first impression sets the tone for what lies ahead; it sets expectations. The last impression is what customers are left with; it’s probably what they’ll remember most about a brand.

It’s not one versus the other. Simply, brands won’t get one without the other. There won’t be a last impression if they don’t get the first impression right.

What should marketers do?

Both acquisition and retention will always be important. Companies need to work on both. Without acquiring new customers, there will be no customers to retain. Without retaining existing customers, companies will suffer through the leaky bucket syndrome, and acquisition costs will be outrageous. So there needs to be a better balance between both, along with a strategy for how to do just that.

Take a look at the customer lifecycle and identify – based on what is known about both potential and current customers – how much (and where) effort and how many resources should be expended along the journey. There’s clearly a disproportionate amount of effort allotted upfront, to the Buy stages. Consider how to redistribute some of those resources to the Own stages to maximize retention efforts and to customer lifetime value.

The aim of marketing is to get customers to know, like, and trust you. ~ Unknown

Annette Franz is an internationally recognized customer experience thought leader, coach, speaker, and author. In 2019, she published her first bookCustomer Understanding: Three Ways to Put the “Customer” in Customer Experience (and at the Heart of Your Business); it’s available on Amazon in both paperback and Kindle formats. In 2021, she wrote the manuscript for her second book, Built to Win: Designing a Customer-Centric Culture That Drives Value for Your Business, which will be available in early 2022! Sign up for our newsletter for updates, insights, and other great content that you can use to up your CX game.

Image courtesy of Pixabay.

Read the original post here.