Marketing Management, 16th Edition

Balancing Customer Acquisition and Customer Retention

Effective management of customer acquisition and retention involves clear understanding and accurate estimation of customer conversion and retention rates. By calculating conversion rates—the percentages of customers at the different stages who move to the next stage—managers can identify any bottleneck stage or barrier to building a loyal customer base. If the percentage of recent users is significantly lower than that of triers, for instance, something might be wrong with the product or service that prevents repeat buying.

The customer acquisition funnel also emphasizes how important it is not just to attract new customers but also to retain and cultivate existing ones. Research on customer ...