Is Acquiring New Customers More Expensive Than Keeping Them?


There has been an ongoing discussion over customer acquisition and customer retention for many years. Both are vital to a business’s success, but which is more important – and which is more cost-effective – are questions that many marketers and salespeople have. Acquiring new customers can be very satisfying, especially when you can see your marketing efforts paying off. However, client retention is just as crucial, and loyal customers are often much more valuable than new ones. Most companies focus heavily on generating new business and invest a lot of their budget into doing so, but these funds might be better placed nurturing those existing customer relationships.

Studies have shown that acquiring new clients is five times more expensive than keeping an existing customer. With that in mind, it can feel like focusing any effort and budget on new customers is a waste of money and time. Evidence may show that customer acquisition is more expensive, but it’s still extremely valuable to businesses of all shapes and sizes. Below, we explore the true cost of customer acquisition compared with customer retention and how your business can successfully nurture existing customers while attracting new ones.

Customer acquisition costs vs customer retention costs

There has been plenty of research which proves that customer acquisition is more expensive than customer retention. The main reason for this significant difference in cost is that consumers will buy from brands they trust. Over half of consumers have said they will spend up to 57% more on a brand that they are loyal to. It takes a lot more marketing efforts to convert a new customer than a loyal one.

Businesses that invest most of their budget on acquiring new customers will likely be spending a lot more than those focused on customer retention. When you think carefully about everything that goes into generating new leads, it’s clear to see that costs quickly add up. These are just a few of the tools that businesses spend money on to acquire new clients:

  • Referral fees: Referral programmes are a great way of bringing in new business and utilising your loyal customers. This strategy often works very well and encourages customer retention at the same time, but the cost of referral fees can quickly escalate
  • Website: It isn’t just the cost of running and maintaining your business website that you need to consider, but the cost of marketing it. SEO, PPC and email campaigns are all common ways of generating traffic, but can become very expensive
  • PR: Investing in a PR agency to get the word out about your business and reach new markets can be effective, but the costs can soon outweigh the benefits if you don’t generate enough new business
  • Events: Research has shown that 70% of people who attend marketing events become regular customers. While those stats might sound appealing, when you calculate all the costs on hosting an event, they can quickly outweigh the benefits.

Customer retention strategies are often much cheaper, mainly because the consumer is already familiar with your brand. You might have the cost of a loyalty programme, email marketing campaigns or other retention tools, but these are nowhere near as expensive as all the tools mentioned above. Not only is customer retention a cheaper strategy to maintain, but it’s more profitable for businesses, especially when utilising the knowledge, research, and authority of a KOL in customer acquisition, retention, and similar specialist areas, such as influencer marketing. In fact, Bain & Company revealed that just a 5% increase in customer retention can increase profit by at least 25%.

Top tips for customer retention

It’s clear to see that retaining existing customers is cheaper than enrolling new ones, but investing in the right customer satisfaction quotes and retention strategies is vital. Here are a few top tips for boosting client retention:

  • Customer reviews: Knowing how your existing customers feel about your service and products is so important if you want to encourage them to return. Use customer reviews to understand what they like and where you can improve
  • Proactive communication: Don’t let your previous customers forget about you and your products. If you haven’t had any interaction from a customer in a while, then be proactive and send them an email reminding them of your great deals
  • Loyalty programmes: Rewarding customers for their loyalty is an excellent way of encouraging them to return time and time again
  • Social media: When a customer does purchase from you, then incentivise them to follow and like your social media pages. This way, you can easily keep those existing customers updated with the latest news about your business. Read more about targeted social media marketing for automotive businesses on

Every business will have a slightly different requirement for client acquisition and client retention. Start-ups and new businesses have no choice but to invest in acquiring new customers because they don’t yet have a customer base to rely on. However, any business that already has a loyal following and many happy customers will benefit from focusing on customer retention like 3 dollar deposit casino. For most companies, it is finding the balance between how much you invest in seeking out new business, and how much is used for encouraging repeat business – because both are vital for success.



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