There are two prongs to all your B2B sales and marketing efforts that drive revenue: customer acquisition and customer retention. These approaches are often pitched against each other in an ‘acquisition vs. retention’ battle, but they are both needed. However, it is worth asking – should you focus more on one than the other to increase revenue? If so, which one?
First, let’s look at what acquisition and retention are, what sales and marketing activities for each are. Then we can explore which one should get the most investment and how you can improve your conversions across both using the power of intent data.
What is customer acquisition?
Customer acquisition is gaining new customers through sales and marketing activities. To acquire new customers, you need to attract their attention, pique their interest in your product or service, persuade them that you can solve one of their key business problems, build trust in your brand, and get them to buy.
Some of the most common methods of acquiring customers in B2B IT include:
- Advertising online and offline, including at events
- Nurturing interest through emails and digital campaigns
- SEO content optimized to help people with a related task or query
- Outreach through emails, messages, and calls
- Social media
- Educational content like articles, white papers, webinars, and videos
What is customer retention?
Customer retention is keeping existing customers. If you already have customers, you want them to keep renewing their licenses, subscriptions, or contracts, and buying more of your products or services. You need to keep your customers happy and engaged with your offering and gaining value from it so that they stay loyal to your brand and interested in what else you may offer.
A few core customer retention activities in B2B are:
- Excellent customer service and complaint resolution
- A clear and easy onboarding process and ongoing support, including accessible documentation
- Continuing to improve and add to your product or services
- Nurture emails to help educate them in the product or related topics and to keep front-of-mind
- In-product notifications of new features and upgrade opportunities
- Reviews and surveys to find out how customers are engaging and what they want
- Educational content like articles, white papers, webinars, and videos
- Customer events and webinars that allow them to access your expertise and you can share about new products, features, and services.
Benefits and challenges of customer acquisition vs. retention
Each approach comes with its own set of challenges, but remember that both retention and acquisition are critical for growing revenue.
Benefits of customer acquisition
Acquisition grows your customer base and revenue which will eventually grow your market share. This gives you greater mind share (how many people think of your offering first) and leverage so your organization becomes increasingly competitive.
For example, if I asked you to think of cloud service providers, who do you think of? You probably have 3 to 4 brands in mind. It’s because you have seen their adverts and heard others in your field talk about them. Companies that consistently invest in being visible in the market usually have a bigger market and mind share. Therefore, they’d be the first providers you’d research if you were buying for the first time, even though there are countless other options.
With more mind share, people will start to seek out your brand organically, which can reduce your customer acquisition costs (CAC). Plus, the more customers you have, the more data you can gather from them to find out who your ideal customers are and how to improve your solution.
Challenges of customer acquisition
Customer acquisition also comes with challenges.
When you are entering a new market, you first need to do the hard work of uncovering where potential customers exist online and in-person before you can even start to get their attention. Then, it’s not always easy to extend your strategy outside of your ICP once you are comfortable with knowing what works for who. You need to understand what related topics your prospects are interested in, how engaged they are in researching solutions to their problem, and how ready they are to buy.
Then, the up-front cost of advertising, marketing, and selling can add up as you invest before you see any returns. This is especially true in B2B marketing to IT buyers as there is an average of 7 stakeholders involved in a B2B tech purchasing decision and 65% of IT staff’s decision-making responsibilities extend beyond their titled scope. This increases costs because you have to create assets that appeal to a wide range of people with varying priorities.
When acquiring customers, you are also up against a lot of competition. You can’t just sell a product or service that fixes an IT buyer’s problems, you must prove you are superior to the competition for each prospect’s use case.
Benefits of customer retention
Keeping customers is a matter of delivering on your promises to solve problems and helping customers continue to see the value you deliver throughout their customer lifetime. This is incredibly valuable because customers who repeat their purchases help to keep your revenue numbers stable and predictable by reducing churn rates, which helps you forecast more accurately.
In addition, a happy customer will spread the word about your offerings which will reduce your CAC. Current customers are also often more ready to purchase additional offerings because they trust you. Their additional purchases, upgrades, and growth in renewals adds revenue and increases customer lifetime value (CLV). Plus, their growth in purchases means that you have a larger footprint in their organization, which makes it more difficult for that customer to leave. If you sell IT products, they will have invested a large amount of time into embedding your product into their environment and it’s hard to switch once everything is built and integrated.
There are many suggestions that retaining customers costs up to five times less than acquiring new customers, but this isn’t always the case. The sales and marketing activity costs around retention may be lower than for acquisition, but if you neglect acquisition to focus on the cheaper retention activities, the long-term cost to the business can be much higher as the value of lost customers is often much greater than the value of a new customer.
Challenges of customer retention
A key challenge in retaining customers is not knowing the truth about how engaged they are with your offering. It’s easy for a customer to drop off the radar and never buy again without you knowing because they don’t get in touch and ghost you when you try to reach out. Usually, this is the result of unsolved frustrations.
For example, it takes, on average, 6.7 minutes for users to find the answer they need to a product related question in technical documentation. In a digital world where answers are served up in a search in milliseconds, this is an enormous amount of time and opens a window of unwanted frustration. These friction points can be hard to spot.
Should you focus more on acquisition or retention?
You wouldn’t have a sustainable business if you didn’t put time, effort, and resources into both customer acquisition and customer retention. Both are crucial. But the question often arises over whether you should put more effort into one over the other.
Most organisations tend to focus on acquiring customers because the results are easy to see and this is the most obvious path to growth. It’s assumed that if the product or service is good enough, people will buy again so there isn’t much need to put huge resources into retention. However, ignoring customer retention can cause revenue instability when you start to see high churn numbers at renewal time. You lose revenue that could have been retained with a little bit of personalized retention effort.
On the other hand, some argue that because customer acquisition is so much more costly than retention, you should focus more on keeping your customers over gaining new ones. It’s ‘easy’ money because customers are more than 60% likely to buy from you than new prospects so you can grow with less investment. However, this misses the point that businesses that focus primarily on brand loyalty (retention) underperform on every business metrics.
Data from The B2B Institute points to customer acquisition being more important than retention in B2B sales and marketing.
Acquisition activities not only help you gain customers but also increase your market and mind share, which helps with building trust and loyalty so that customers are more inclined to stay with you after purchasing.
If you build your brand presence, people feel more at ease about choosing your solution because they perceive it to be a popular and safe choice. The old, popular B2B IT saying, “Nobody ever got fired for buying IBM” hints at exactly that principle of safety in perceived popularity.
However, whichever strategy you give more time and energy to, don’t neglect the other. They are two strategic prongs that are essential to business growth and stability.
How intent data can increase your acquisition and retention conversion
Both customer acquisition and retention are time consuming and can often involve educated guessing to determine how interested a lead is in purchasing and whether there are issues that may cause a customer to churn.
This is where you need the power of quality, detailed intent data.
Intent data is data that shows a person or account’s intent to purchase. This can include lead and customer contact information, research topics, levels of engagement, who else is on the buying team, and more.
(You can find a full explanation of how to use intent data for sales and marketing in this blog post.)
Let’s explore how intent data can help you increase your acquisition and retention conversions.
How intent data can speed up customer acquisition
You spend large amounts of time and money on following up MQLs and SQLs with very little certainty over how likely they are to become customers. So how can you increase your chances of success with prospects by figuring out who is most ready to take the next step in the buyer journey?
When you are looking for customers, it would be ideal if you can see who is searching for information within your industry, and intently searching for solutions to problems that you solve, even if they haven’t landed on your website yet.
Prospect-Level Intent data can provide you with collated information on who in an organization is searching for what terms and their level of engagement in research. You could even see whether others in the same account are researching similar topics and may be part of the buying group.
With that sort of insight, you can pinpoint highly active accounts, specific profiles to reach out to, and have the data needed to personalize your targeting, outreach messaging, and nurture content. All this helps you spend more time on prospects with a high chance of conversion and lets you increase your conversions more easily than scaling a team to chase down hundreds of potentially disinterested leads. Plus, the right intent data can show you opportunities in organisations and industries you may not have considered before.
How intent data can increase your customer retention
When it comes to keeping customers, you may be making educated guesses again about how satisfied customers really are with your offering and how likely they are to buy again. With intent data, you can remove the guesswork.
Intent data that reveals the search habits of customers can help to raise a flag when they are researching other, similar offerings to yours. This data can prompt Customer Success to reach out to the account to see if there are any points of friction or frustrations with your product or service that can be solved to prevent the customer churning. It can also highlight the competitors in your market so you can be strategic about how you present your offering considering the competitive landscape your customers are aware of.
Another use for intent data is understanding the customer’s interests based on the topics they research so you can segment your customer base. This segmentation allows you to reach out with more relevant, personalised nurture content and offer them additional products, tiers, and services based on their needs.
How TechTarget can help you increase your conversions
If you want to be able to spot when prospects are starting to research solutions like yours, or get alerted when your customers are researching some of your other offerings so you can reach out to them with cross-sell and up-sell opportunities, TechTarget has the intent data you need.
As a leading innovator in the intent data field with over two decades of experience helping enterprise tech companies with revenue engine optimization, TechTarget has the capabilities and knowledge that teams like yours rely on for guidance, implementation, execution, and optimization every day. Find out more about our detailed purchase intent data that accelerates pipeline.
If you’re ready to start your intent data journey, speak to a TechTarget representative today.
This blog provides unique perspectives and expertise based on our direct experiences within the EMEA market and is designed to be a resource for marketers targeting or working directly within this market.
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