3 Ways To Balance Customer Acquisition and Retention Strategies


Last updated on June 28, 2024

You can’t grow your business without expanding your customer base. However, should your marketing budget be more focused on customer acquisition or retention is a tough question and one that will eventually define your growth.

Talking about customer retention, you possibly already know the merits of investing time and money in keeping your existing customers satisfied and hooked. Yet, we brought you some stats to reiterate the importance of cultivating a tribe of happy, loyal customers.

  1. It is easier and also cheaper to retain existing customers than to acquire new customers.
  2. Existing customers spend more, buy more often, and act as a rich source of referrals.
  3. Not surprisingly, a 5% increase in customer retention can boost your overall revenue by up to 95%.
  4. A well-planned customer retention strategy helps you maximize your LTV, which is the average amount of money a customer will spend on your business over the entire customer-relationship cycle.
Loyalty increases at every level of customer - Lumoa
Image Source: Experience Matters

That’s a strong case for focusing your marketing budget on customer retention. But wait, it’s not as simple as that. According to experts, about 50% of your customers churn naturally every five years. So, if you are only focusing on customer retention, you can calculate where you may be heading with your customer base. Of course, the rate of churn varies across industries, but natural churn is real, and it should compel you to allocate at least some part of your marketing budget to customer acquisition strategies. Moreover, you can put customer retention strategies into focus only when you have customers to retain. This is certainly not an option for young companies that must allocate 100% of their efforts to customer acquisition to get their venture off the ground.

Striking A Balance Between Customer Acquisition And Retention Strategies

There’s no straitjacket approach to dividing your marketing budget into customer acquisition and retention strategies. However, if you already have a decent customer base and are looking for a formula to start with, I suggest devoting approximately 60% of your resources toward customer retention. The remaining 40% can be used for lead acquisition through SEO, advertising, social media, and other methods popular in your industry. Once again, this is just an idea and not a thumb rule. In fact, I recommend that you review the results of your acquisition and retention efforts regularly to fine-tune it according to your business goals. 

Actionable Tips To Get More Out Of Your Marketing Budget

As previously mentioned, most companies (except very early startups) will benefit from a mix of customer acquisition and retention strategies. That being said, it is vital to strike a balance between the two, and here are some tips to help you achieve that balance.


The customer experience (CX) is the latest battleground for brands, and offering fast and efficient customer service is one of the best ways to improve your CX. Investing in an AI-powered chatbot will give you the dual benefit of improved customer service and reduced burden on your customer-facing staff. 

In addition, your chatbot can be trained to serve as a powerful client onboarding and retention tool. For example, your chatbot can send welcome messages to first-time users, offering to help them around the site proactively. For returning users, the chatbot can use browsing history and purchasing behavior to make personalized offers and recommendations for repeat sales. 

Besides personalization, your chatbot can also be used to collect feedback or conduct short surveys while users are browsing your site to understand their experience better. Using machine learning algorithms and NLP, the chatbot also acts as a self-service tool on your website to give your visitors the answers they seek in a jiffy. 


Acquisition channels are used to bring first-time visitors to your site. In contrast, retention channels bring customers back to your website through re-targeting methods, after the acquisition stage is over. Of course, there are several ways to achieve both, but can you identify channels or strategies that will work for both acquisition and retention?

One such example is content marketing. While content like blogs, infographics, videos, and podcasts improve your search engine visibility and add to your credibility, specific blog posts, interactive demos, industry reports, case studies, and whitepapers also help in retention by bringing your existing customers back to your site for insightful information. Also, don’t forget about implementing effective content operations that are crucial in managing and optimizing these efforts to ensure that the content is not only created but also strategically used across different channels for maximum impact.

MyCustomer 400 1 - Lumoa
Image source: MyCustomer.com


Returning customers are an asset to your brand, and you must reward their customer loyalty to keep them coming back. However, all returning customers don’t offer equivalent value to your brand. Therefore, it makes sense to segregate your customers according to their business worth before creating a tiered incentive program to reward higher spending. This serves a two-fold purpose of making your most valuable employees feel special while motivating the others to join the privileged league.

Besides rewarding customers for spending more, you can also make use of their contacts to grow your customer base. For example, you can create a referral program wherein you offer specific discounts or free trials to the accounts referred by your existing customers. The customer making a successful referral also gets an extended subscription, discount, or other freebies as a reward for spreading the good word and helping your business grow.

If you don’t want to build a loyalty or referral program at this stage, you can still tap into your existing user base to gain new users by asking for testimonials and reviews that can go up on your site as social proof.

Final Thoughts

Every business needs an expanding pool of customers to grow. This customer pool is a mix of your loyal, returning customers, as well as new customers that would hopefully be a part of your returning customer base soon. In other words, customer relations must be nurtured at every step of the lifecycle to ensure constant engagement and increased LTV. A straightforward way to achieve this is by building user personas for targeted marketing and re-marketing. By using analytics, past buying behavior, and real-time user data, you can personalize your marketing campaigns to get better results for both your acquisition and retention strategies.

Do you want to read more about customer experience-related metrics?
Then check 6 Most popular customer experience metrics and KPIs explained simply

Dhruv Mehta is a Digital Marketing Professional who works at Acquire and provides solutions in the digital era. In his free time, he loves to write about tech and marketing. He is a frequent contributor to Tweak Your Biz. Connect with him on LinkedIn.

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