When you first opened your dispensary, your primary marketing focus was likely on acquiring new customers, which is appropriate for a new business. You can't be successful without customers coming in the door.
However, if you have your eye on long-term success, it is essential to consider how to keep those customers coming back to your business.
This is the core difference between customer acquisition and customer retention. How do they differ? Which is most beneficial? Why does your business need to consider both? Let's dig deeper.
The Shift From Customer Acquisition to Retention
Customer acquisition refers to the steps you take to gain new customers. This includes marketing, branding, and money spent on ads -- anything and everything you do to persuade new customers to choose your brand over another.
Customer retention refers to the actions your business takes to keep customers coming back. This may include an email newsletter, relationship building, reward or loyalty programs, and more.
This shift from acquisition to retention is vital to the long-term success of your business. Why? There are several reasons; we will look at the most powerful below.
Acquisition Costs More
First, customer acquisition is more expensive than retention. According to Amy Gallo at the Harvard Business Review, it is between five and twenty-five times more costly to gain a new customer than to keep the ones you already have.
Retention also helps increase the value of every dollar spent on acquisition by increasing the length of the customer relationships and their lifetime value.
Put simply, keeping customers costs less than finding new ones.
Acquisition Takes Time
Marketing expert Dr. Jeffery Lant states a prospect will need to be exposed to your brand an average of seven times before they are ready to make a purchase. While this is an average that may not apply to every brand, it does give you an idea of how long acquiring new customers can take.
Retaining customers, on the other hand, is an ongoing process that requires a much smaller time investment and is much easier to ramp up when needed.
For example, let's say you realize you aren't going to hit your fourth-quarter sales goals in early November. You don't have time to acquire hundreds of new customers through brand new ad campaigns. Those would need to be written, created, and tested. You probably wouldn't be able to launch the campaign until the New Year.
However, an email or targeted ad with a special aimed at bringing in current customers could easily help you reach those sales goals.
Your Competitors Aren't Focusing on Retention
Want to stand out?
A survey by Invesp revealed that 44% of companies focus more resources on customer acquisition versus retention. Just 18% focus more on retention than acquisition.
Brands that are just starting out are focused on getting customers in the door, but more mature brands know the key to long-term success is in building relationships.
If you are looking for a way to stand out, concentrating on making your customers happy is an obvious way to create a niche for your brand.
Customers are Willing To Spend More on Brands They Love
A study by global consulting firm Walker revealed that by 2020, customer experience will overtake price and products as brand differentiators. This means customers care more about how you treat them than what you charge or even what products you carry.
This stat is of particular importance to dispensary owners, who are often facing thin profit margins.
Final Thoughts to Consider About Acquisition vs. Retention
The benefits of customer retention are clear, but it is important to note that dispensaries should focus on both acquisition and retention. Focusing solely on any one marketing is not the best practice.
It is also important to consider which customers you want to keep. Focusing on customers in your target audience will help you grow in the right direction.
The key to success in business lies in relationships. Building strong relationships with your customers is what will keep them coming back to you.
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