The Long-Standing Debate
For many years, acquisition versus retention has been a long-standing debate among marketers. As both are beneficial strategies, a unique combination is recommended based on the brandand its competitors’ positionsin the market.Let’s dive a little deeper into what these approaches mean for a business.
Acquisition boosts key metrics driving a digital business, such as clicks per page, total visitors, daily and repeat users, etc. While customer retention is a long-term process with results that may take years to come to fruition, acquisition campaigns offer quick and easy measurements of success. For example, ‘new users’are a straightforward metric that can be seen immediately. However, it’s important to note thatthough the results of an acquisition campaign are more readily available, the data collected doesn’t necessarily help drive an actionable growth strategy.
Most digital businesses use customer acquisition campaigns as the marketing equivalent of ‘instant gratification’ without considering if they constitute the best use of funds. Furthermore, acquisition is more expensive than retention, with research indicating that acquiring a new customer may cost up to five times more than keeping an existing one.
On the other hand, retention leads to improved ROI. A study by Harvard found that a 5% increase in online retention can boost profits by 95%. A robust retention strategy helps retain existing long-term customers who become more valuable with time. In fact, the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is 5-20%. What’s more, existing customersspend 31% more than new customers and are also50% more likely to spend on new products.
Irrespective of a brand’s retention/acquisition strategy, customer segmentation, personalisation, and effective multi-channel communication are vital for it to be successful and memorable. Now let’s put this into a sports context.Sports fans across the world are always on the lookout for unique experiences, which are vital in securing long-term fandom. Hence, it’s increasingly important for clubs and leagues in Asia to deploy an engaging digital strategy to keep their fans connected. In fact, the best-followed clubs and franchises have leveraged diversified content such as new signing announcements, kit launches, BTS content, draft day reactions, etc., to keep their fans engaged across channels. Brands that build unique occasions for their audiences are likely to forge stronger relationships with them.
A brand’s ability to connect with its fans organically and retain their interest is key to driving its Lifetime Value(LTV). For brands with long LTVs, customers are5x more likely to repurchase, 4x more likely to refer,7x more likely to try a new offering, and 5x more likely to forgive. One must also remember that team sports are heavily focused on tribalism, and it’s importantfor clubs and leagues to identify specific fan sets and market their products accordingly, based on the available data. A major challenge faced by large-scale businesses today, including professional teams and leagues, is that only 42% of companies can measure Customer Lifetime Value accurately. This data is essential and key to defining and driving a well-prepared fan retention strategy.
With the large-scale availability of fan data today, it is crucial to understand how acquisition and retention affect a brand’s overall marketing strategy and spending. This is where a Customer Data Platform (CDP) can play a pivotal role in deriving actionable insights that help drive omni-channel marketing solutions. The advanced capabilities of a CDP to synthesize data from multiple sources, including ticketing portals, email addresses, phone numbers, barcodes, websites, social media, etc., can help create personalized messaging, fan profiling, and segmentation. The vast availability of data insights generated by a CDP will go a long way in determining and assigning a true Customer Lifetime Value.
Chiraag Paul, Co-Founder & CEO, Proem Sports