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The UPS Store Small Business Blog
  • 22 June 2020
  • Taylor Miller

Customer Acquisition and Retention Models

The traditional business model is designed to attract a customer and then move on to the next one. However, don’t you want to know what happened to that first customer? Were they satisfied with what they purchased from you? Maybe they loved what they bought but you never took the time to retain them as a repeat customer.

As business owners, you may occasionally forget about retention and mostly depend on advertising dollars to reach people. But never forget the people who have already done business with you. Here are four key guidelines to follow for acquiring and retaining customers.

  1. Pricing Models — Exploring methods to price your products can be difficult at times. You do not want to price items too high and drive away potential customers, but at the same time you don’t want to price an item too low. So, what do you do? By deploying different pricing models for your products, you can develop a variety of options that offer smaller or introductory ways for people to do business with you without having to purchase your top-selling items.

  2. Advertising — Advertising is a key method to getting the word out about your business to entice new customers. Fortunately, with social media and paid online advertising, you can run all the advertising yourself, which is highly cost-efficient. Nonetheless, you should also spend time on customer retention because your advertising can cost you five times more to reach new customers versus the cost in retaining one.

    Man smiling while holding a book open in front of him
  3. Can’t Get Enough — Chances are you have a group of frequent customers who you have retained throughout the years that your business has been running, and those are the customers you want to learn more about. Determining why your repeat customers keep coming back will help you understand how you can retain your new customers. If you are a bookstore and notice that the majority of your customers are purchasing only mysteries, you can completely change your business model to attract and retain customers who prefer that genre.

  4. Personal Touch — Everyone likes to feel important, and that is why a key area in customer retention is always adding that personal touch to every interaction you have with your customers. Producing an email newsletter or building a social media page and getting to know your customers are ways you can interact with and get to know them. You can even create polls or surveys to find out what people are enjoying from your business to help drive additional customer retention.

Acquiring customers goes hand in hand with customer retention, and the two areas should never be separated. Rethinking your business strategy and discovering what your customers are buying can provide you with new ways to reach your past customers to keep them coming back. Always remember that it is more cost-effective to retain current customers than it is to attract new ones.

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