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Should you focus on Customer Retention or Acquisition?

Ideally, if you can keep acquiring customers and keep all of them, your business will be booming right?


That’s only if your business works that way and can support that type of growth.

For online subscription businesses, that works really well. But if for retail, that’s a different story.


Imagine if you’re a mattress seller and your customers only buys a mattress like once in 5 to 10 years.

Will there be a lot of value to focus heavily on customer retention?


Of course that doesn’t mean you forget of your customers immediately after the sale. You still treat them well and give them the after sales service they deserve and ask for a nice review on Facebook & Google. But in terms of effort and budget spent, naturally you should focus more on marketing and customer acquisition.


Yes, not every business should focus equally on both. Here are some factors to help you determine which side should you focus more:

1. Purchase Frequency

On one end we have your fast moving consumables products & services like beauty products, toiletries, restaurants, etc. And on the other end, we have your slow moving products & services like bed/mattress, photography services, etc.


If your business allows for customers to purchase frequently, it will be more worth it to focus on Customer Retention.

If your customer buys from you once in 5 years, then it would be better to focus more on Customer Acquisition.

2. Your Differentiation

How differentiated are your products & services as compared to competitors?


In fact, by investing to differentiate yourself from your competitors, it’s already your first step to Customer Retention. For undifferentiated businesses, it’s hard to retain customers because there’s nothing significant for them to remember about you.


Imagine if you’re just another Average Chicken Rice store in the food court.

Do you think customers will bother coming back to you if there’s a more convenient competitor nearby?


Of course it’s not wrong to remain undifferentiated, it’s just another strategy for businesses. For the above example, the business is providing a convenience for customers that feel like eating Chicken Rice at that moment.

As Chicken Rice is a already popular food for Singaporeans, the demand is naturally there. People are also not so picky with the taste as long it doesn’t taste too bad. So for this case, investing in the right location with heavy foot traffic and no direct competitor around is the key for its success.

3. Your Business Model

If your customers pay every single time they visit you, you should focus more on Customer Retention.

But for businesses that sell packages, naturally they tend to prioritize Customer Acquisition over Retention.


Why? Because the chance of an existing customer spending again when they visit is small. And it takes a while to for them to finish up their package. So when there’s a booking from new customer and an existing customer, businesses might give it to the new customer. After all there’s a chance to make a sale from the new customer.


Of course this isn’t good practice for long, but situations calls for it.

After all the business still has to pay its rent, staff & expenses too every month.


This is especially true for new businesses starting out or businesses that have grew too much. But once your customer base starts to build up, your should start to focus equally on Customer Retention too. Do follow up and send reminders to customers to get them back to finish up their package. If they truly like your services, they will most likely renew a package with you.


It’s definitely much easier and cheaper to keep an existing customer than to find a new one.

To Conclude

Lastly, it’s always good to focus on both it you have the time, know-how and budget. But small businesses with limited manpower and budget, it’s hard to do both at the same time. So it’s much better to focus more on the one that’s more crucial for your business at that point in time.


Usually Customer Retention is much harder because it’s additional work for your staff. Plus it doesn’t bring any immediate value for your business & staff. But if done correctly & consistently, you will find yourself having plenty of returning customers for your business to thrive.

SoVou is an affordable Cloud Loyalty System that uses SMS to engage your customers and encourages them to share your promotions on WhatsApp, Facebook, Twitter & Email.

Our Loyalty System’s is specially designed for Small Brick & Mortar (Offline) Retail Businesses that requires customers to come down to buy or use their services. We have stripped off the complex features to ensure that you and your customers have pleasant experience with your Loyalty Program.


Feel free to contact me at find out more about our Loyalty System!


Everything expressed in this article is my personal opinion and might not be applicable for all businesses. Please share with us your ideas and thoughts too so we can grow & learn together!


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