Who's Afraid of Customer Acquisition?
A little customer acquisition never hurt anybody. Yet, you would think from the recent plethora of warnings (this blog included) about the importance of customer retention and the prohibitive costs of buying customers that acquisition is toxic. It's not.
A recent conference I attended at the Yale School of Management illustrated this point to me very clearly. Yes, the Yalie professors said, customer acquisition is more expensive than retention. And yes, retention is important. But there's no need to run and hide from the good old American business practice of going after your competitor's customers. No need to be afraid of spending some money on reaching out to potential rather than current customers. Acquisition costs have been driven down by Internet advertising and more efficient marketing optimization. The old school belief that its costs 10 time more to acquire a customer may not be true anymore. I'd like to hear from some people who have a cleaner metric on the difference between retention and acquisition programs. What do you think?
