The costs of digital customer acquisition vs retention

Posted by Tiffany Leung on 27 Nov


Business growth almost always depends on having good customer relationships. When it comes to creating marketing strategies, most companies focus on attracting new customers rather than retaining the customers they already have, and this ends up costing them more money. Customer acquisition is without a doubt necessary for business growth, but attracting new customers often costs five times more than nurturing existing customers.

Costs incurred in digital customer acquisition vs retention

Paid search

This method of advertising utilises a pay-per-click model that allows advertising companies to only pay when someone clicks on their advert and visits their website. A recent survey revealed that 86% of companies use this method to acquire new customers compared to only 2% of companies use it to retain their existing customers. The statistics suggest this can become expensive in the long term as it is not guaranteed that the new customer traffic to the website will purchase anything.

Online display advertising

Also known as banner advertising, this method of marketing uses logos, texts, videos, animations and photographs to convey a commercial message. This method of advertising uses unique identifiers to decide which adverts are displayed to consumers. 85% of companies use a method of advertising to reach out to new customers, and only 4% use it to retain their current customers.


Search Engine Optimisation (SEO) involves changing your website design as well as your content to make them both more attractive to various search engines, therefore increasing the amount of organic traffic. By optimising your website, you hope that the various search engines such as Google will display it as a top result on the search engine results page. SEO is used by 66% of marketers to acquire customers and by 6% to retain customers.

Social media marketing

Companies use various social media platforms such as Facebook, Instagram, YouTube and many more to connect with their customers to drive traffic to their websites and increase sales. To make this method of advertising more effective, brands use influencers to help market their products and services on various platforms but this can be costly. 31% of marketers use social media to attract new customers, and 28% of them use it to retain customers.

Customer Acquisition requires more input, but in most cases, the amount of money put into acquiring new customers does not translate in sales. The customer acquisition cost is high, and it, therefore, becomes a high input low output situation. According to a recent survey, the probability of selling to a new customer is 5- 20% while the possibility of selling to an existing customer is 60-70%. If you are launching a new product, chances are 50% of your current customers will be interested in buying it. 31% of existing customers are also likely to spend more money on your products and services.

Marketers are advised to put more resources in retaining customers because it only requires you to nurture the relationships you already have with your customers. By providing excellent customer service, loyalty programs, high-quality products and services you can be sure to retain most if not all of your customers. Customer retention can also be a good way to acquire new customers without spending any money because of the referrals offered by existing customers. 

Topics: CRM, Business Management Software, Business Efficiency, Productivity, Management

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