Whatever field of business you’re in, your growth depends on your customers. And when it comes to your customers, there are two key goals that get spoken about more than any other: acquisition vs retention.

Most of the time, the question is which to focus on first when looking to grow your business. There are certainly pros and cons to both approaches, and most companies tend to prioritize one over the other.

But what we want to know is: are we even asking the right question?

Let’s take a closer look at acquisition vs retention.


Customer acquisition is the process of bringing new people to your business. If you’re a media company, that might mean bringing new readers to an article you’ve just published, or if you’re an eCommerce company, bringing a new customer to your online clothing store. Acquisition mostly works through paid advertising campaigns like on Google AdWords or on social media sites like Facebook.

Today, most online businesses focus on acquisition. Even by 2013, AdWords had over one million customers. That number has grown steadily ever since, and paid ads on Facebook and Twitter are more popular than ever.

When you think about it, the pros of the acquisition-focussed approach are clear:

  • You can guarantee visibility – especially among good potential customers if you use demographic data well
  • You can constantly bring fresh customers to your brand
  • It’s easy to measure the performance of your marketing spend

But there are also some clear cons with this approach:

In the end, the acquisition-driven approach looks like this:



The downsides to the acquisition-focussed approach got a lot of people putting their efforts into retention. Customer retention is the idea that you first make sure that the customers you already have are very happy with you, rather than just trying to bring new ones in.

Industry leaders like Benchmark’s Bill Gurley have spoken about why going for retention first is the best way to grow your business. Not only can it be up to 5x more cost efficient to maintain a customer rather than acquire a new one, but it’s generally agreed that 20% of your customers will usually account for 80% of your revenue – so it’s vital to keep them happy.

The pros of focussing on retention have huge upsides to your business growth:

So why do most companies still hesitate to concentrate on retention first? Here are some cons:

Overall, the retention-driven approach looks like this:


Acquisition vs. Retention

A survey by Bain & Co. showed that increasing customer retention by just 5% can see a rise in profits by anything from 25-95%. And yet, 44% of companies focus more on acquisition than retention, compared to just 18% who do things the other way around.

Why is this? There are big benefits of a retention-led approach, but we think the pressures of maintaining a bottom line and needing to see clear results from your marketing spend make the retention-only approach tough in the short-term.

But as dozens of experts have said, short-sightedness can be a recipe for disaster. Focussing on pleasing the customers you have will help you avoid falling into the trap of forever spending your marketing budget on paid ads that don’t take your business anywhere in the long term. If the question is to go with just acquisition or retention, retention should come first.

But is that really the question we should be asking?

Your goal should be to continuously make new customers loyal

We think the story of how best to grow your business is more complex than just acquisition vs retention. Why aren’t we trying to do both? Isn’t the key to true growth being able to retain existing customers and acquire new ones at the same time?

We believe that the best goal for any growing business is to inspire loyalty among the customers you have, but then also bring in new customers who can become loyal and refer new people again. We call it the 360° viral loop – and it looks like this:

360 loop

In our next post, we’ll show you how this loop works. We’ll show you why to continuously make new customers loyal, you need to need to be able to personalize experiences in the loop of: homepage, landing/article page and social posts. And we’ll show you why artificial intelligence (A.I.) needs to be at the heart of it all.

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