Explain the difference between customer acquisition and retention.What two marketing strategies that would help a company accomplish each of these two objectives?

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brettd's profile pic

brettd | High School Teacher | (Level 2) Educator Emeritus

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Most cable or Satellite TV companies and cellphone companies have entire departments dedicated to retention of customers.  There is intense competition between companies, so often times one will make an offer to get someone to switch, and then the retention department tries to counteroffer to get them to stay, as it makes more profitable business sense to give current customers further discounts if it means they will stay with the company for many more billing cycles.

Customer acquisition is the department that tries to get others to switch.  They cold call, use advertising, run specials, and otherwise entice potential customers away from their current provider and add to their customer base.

The two strategies I would choose in these situations might look something like this:

Customer Acquisition:

1)  TV or newspaper AD: Special this month! Free hardware and installation when you subscribe to our HD TV extravaganza for 24 months, at a low introductory rate of $24.99 a month.

2)  Direct Mail: send fliers with special offers right to their individual homes, which usually leads to a 1 - 2% reply rate.

Customer retention:

1)  Call everyone who attempts to cancel your service and offer them an incentive to stay - free month, new upgrades, lower rates, etc.

2)  Sign people to long term contracts with high penalties if they break them, so you lock your customers in for a long period of time and have revenues you can count on.

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krishna-agrawala's profile pic

krishna-agrawala | College Teacher | (Level 3) Valedictorian

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Customer acquisition refers to converting a person, who is not a customer currently, as a customer buying your products. This means that a person who was not buying your product earlier, because he or she was not using that kind of product at all, or was buying an alternate brand of the products, starts buying your product. Customer retention refers to keeping an existing customer happy, so that he continues to buy your product.

Customer acquisition requires focus on activities like creating customer awareness about your product and convincing the customer about its benefits benefit through suitable marketing communication programs. It also involves providing motivation and incentive to customer to take positive action in form of  deciding in favour of your product and try it out at least once.

Customer retention on the other hand requires focus on ensuring that the customer is satisfied with the product quality and associated the service provided by you. Here the stress is on product quality, the distribution function, and after sales service. The focus of marketing communication function shifts from creating awareness and providing information about the product, to assuring the customer that the choice made by him or her to buy the product is the right choice. Customer retention also requires attention to countering the actions of your competitors to win over your your customers.

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