How You Can Improve Customer Retention & Acquisition

This article has been reviewed by Billy Stevens for accuracy.

Why You Need Customer Acquisition AND Retention

Customer acquisition is necessary for growth, while the goal of retention is to keep the profits coming in. Every business owner wants to grow revenue and increase profitability. To settle for anything less is no better than working for wages.

The key to long-term success is finding the balance between attracting new customers while retaining as many as possible for repeat business. The key to striking that balance is to provide a great customer experience that makes people customers for life and will gladly help you find more just like themselves.

Customer Acquisition Is Hard Work...

To find new customers, you have to understand your customers what they want and need, what they like (and don’t like) and where to find them online and off. Then you can use the right channels to get in front of them with your message:

  • Business website optimized for search engines
  • Business blog
  • Email marketing
  • Video
  • Ebooks
  • White papers
  • Product flyers
  • Mobile marketing
  • Social media
  • Paid search advertising
  • Local news coverage
  • Public speaking
  • Community event participation and sponsorship
  • Word of mouth

It’s a lot. You don’t have to do them all but one or two will not get the job done. The overriding reason is that people simply don’t trust businesses the way they used to.

A study conducted by marketing software company HubSpot found that more than half of Americans don’t trust companies they buy from as much now as they did in the past.

HubSpot’s research found 81% trust the advice of friends and families over advice from businesses. Also, 71% do not trust social media ads and 65% don’t trust any advertising!

…and It Is Expensive

Getting traffic to your website costs money. Advertising costs come immediately to mind, with competitive keywords in HVAC and plumbing costing $50 – $100 per click. And not all of those clicks convert into calls or appointments, let alone sales.

Google doesn’t charge you to be show up in search results but that doesn’t mean getting organic traffic to your website is free. Developing content that makes the top listings in Google or any other search engine requires skilled writers who understand search engine optimization (SEO).

How You Can Improve Customer Retention & Acquisition - Sera Systems

This illustration from marketing firm ProfitWell shows customer acquisition costs (CAC)are rising steadily and have increased by roughly 60% over the past five years for B2C and B2B firms alike.

JB Warranties, which provides extended warranties to the industry, put the current average cost to acquire a new residential HVAC customer at $350.

For a quick cost check add up your sales and marketing costs for a given period and divide the sum by the number of new customers you got in the same period. The article goes into some detail.

There are only so many people in your service area that you can acquire, so you need to make the most of them. Listen to them, solve their problems and keep them for the long haul.

When we acquire customers with the intention of keeping them as lifetime customers it guides our marketing, brand development, and how we build a customer experience that is worthy of their loyalty.

Four Key Benefits of Customer Retention

Seeing your customer count go up takes some of the sting out of your marketing spend and can be intoxicating. It’s an easy metric to understand and track. But the fact remains that it costs more to acquire new customers than to do business with established customers who already know you.

When you have a good customer retention strategy you also have the best possible customer acquisition strategy built into the process. Referrals are part of the reason but the benefits go beyond that.

  1. Affordability – Marketing experts say the cost of customer acquisition is anywhere from five times to 25 times more expensive than customer retention. That’s a wide range but if your business is in the lower end that still means new customers cost five-to-10 times more than working with existing ones. You have a 5% to 20% chance of closing a sale with a new customer but for repeat business the 60% – 70%m odds are much better.
  2. ROI – Return on investment is higher when expenses are lower. Well, duh. But ROI gets a big boost because returning customers tend to spend more than new customers. They trust you. Furthermore, they are willing to pay premium prices for a premium customer experience.
  3. Loyalty – Investment firm Bain & Company says a 5% improvement in customer retention produces more than a 25% boost to profits. THAT is why you want to track customer retention. When it falls you need to find out why and fix the problem.
  4. Referrals – People like to share. They also like to brag. When they have a great experience with a business, they can’t wait to tell their friends as they will keep doing business with that company. With all the new tools and technologies available, word of mouth is still the most powerful way to get your story told.

Challenges to Customer Retention

The lack of trust mentioned above as a challenge to customer acquisition also affects customer retention. Trust must be earned, never assumed. These days, customers trust family, friends, co-workers, and review sites such as Yelp.

Add impatience to the list of obstacles to be overcome. People leave a web page that loads too slowly, they hang up when placed on hold, and they will stop doing business with companies that take too long responding to requests.

The HubSpot study also found 82% said an immediate response was “important” or “very important” when looking for product information. That number rises to 90% when people are trying to get customer service. More than half of respondents defined “immediate” as 30 minutes or less.

Topping that off, customer choices are at an all-time high at the same time their attention spans are at an all-time low. These challenges are opportunities for customer-focused service businesses.

Delivering a more engaging, personalized customer experience is the best way to make your voice heard through all the noise and stand out from your competition.

Strategies for Customer Retention

Improving customer retention doesn’t happen automatically nor by accident. It requires a planned, strategic approach and some patience. The first step is to know what your customer retention rate is and how to use it as a management tool.

This usually involves using a combination of strategies and tactics that may include:

  • Tracking your customer retention rate regularly
  • Offering subscription or membership plans that provide real value
  • Having open and frequent communication with customers
  • Providing useful information to educate and inform
  • Asking for feedback and how to improve your service
  • Providing online tools for service scheduling and records
  • Always building trust (they may buy but not trust you)
  • Offering choices and affordable options

Balancing Customer Acquisition and Retention

We said at the beginning that a business needs new customers for growth and repeat business for profitability. And we noted that good customer retention strategies and tactics multiply your acquisition efforts. Getting the balance right is critical.

Market research shows it’s never either or when it comes to customers. But many companies mistakenly focus most of their resources and efforts on acquisition to the detriment of retention.

We are in an “experience economy.” People want all their experiences as customers to be great, from dream vacations to error-free home services. Unlike acquisition, where one or two people may be involved in adding a new customer, retention includes many people and departments across a company.

Before you can have effective customer retention you must first understand your company’s internal processes and how they affect customers. You may be surprised at the miscommunication and inconsistency once you begin that review.

Once you have your internal processes in sync and understand what your customers want you can differentiate your business from your competitors in meaningful ways. Start with the determination to provide a great customer experience and then apply technology to make your business processes as efficient as possible.

Aim for a 100% customer retention rate. You won’t get there but when you focus your efforts on outstanding customer service you will do well. Most businesses would love to have a 90% rate.

Using Technology to Get and Keep More Customers

A new generation of field service management software is available to help service business owners who want to grow their businesses and become more profitable.

Unlike older software solutions that offer a menu of features and functions that don’t always work well together, the new software is designed as a fully integrated package that eliminates interoperability problems. Here is how it works.

  1. Customers schedule their own appointment date and time with scheduling software easily added to your existing website. Customers can provide details, including photos they take and upload.
  2. The scheduler feeds the appointment information into an automated dispatching app that selects the best technician for each job based on dispatching parameters you define, such as tech and customer locations, driving distance, and skills required.
  3. The scheduling app passes the data to a technician mobile app that relays all customer-provided information and GPS routing.
  4. Customers can track technician location, estimated arrival time, and account information including past invoices, technician notes, and warranty information in a secure customer hub.
  5. You and your office staff oversee everything from anyplace you have an internet connection.

The purpose of this type of solution is to automate repetitive tasks that software can do faster and with fewer errors than people, starting with scheduling and dispatching.

That frees up CSR and staff time to work with customers directly to provide personalized service. Companies using such software have documented operating efficiency gains up to 30% and more within a few weeks.

If you would like to see how this works you can schedule a personal demonstration now.


Improving customer acquisition and customer retention are equally important. A steady flow of new customers is the key to sustained growth. Repeat business from existing adds to profitability because sales and marketing costs are five-to-10 times less expensive.

Constantly increasing customer acquisition costs have gone up about 60% over the past five years and currently stand at about $350 for new residential HVAC customers.

In addition to the lower cost, customer retention strategies provide a higher ROI, less churn because of greater customer loyalty, and referrals to friends of existing customers. Good customer retention strategies provide a big boost to customer acquisition.

Before you can develop a successful customer retention plan you first must understand how your internal business processes affect customer experience.

The best way to bring meaningful change to your company’s customer experience is by using a new generation of field service management software that simplifies your business operations so your staff can spend more time helping customers.

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