Bringing Balance to Your Marketing: Loyalty vs. Acquisition

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In the Star Wars prequel trilogy, it was believed that Anakin Skywalker was the Chosen One destined to bring balance to the two sides of the Force. When it comes to your marketing, are you balancing your existing customers with your quest for new customers?

More than 10 years after the Star Wars prequel trilogy concluded with (spoiler alert!) Anakin becoming Darth Vader, people still debate about what "bring balance to the Force" actually means and whether Anakin/Vader fulfilled the prophecy or not. The debate over whether customer loyalty or customer acquisition is more important has been just as cloudy, leaving business owners wondering how to balance the two — or if they should be balanced at all.

Let's take a look at the pros and cons of each side of this marketing debate and how we can bring balance to the brand.

Customer Loyalty


Pro: The 80/20 rule has been around for more than 100 years and has been used to claim that 80 percent of a company's sales come from 20 percent of its customers. The rule is the cornerstone for many customer loyalty programs that are designed to make sure the customers who purchase the most continue doing so. If your most loyal customers are a crucial part of your revenue stream, why wouldn't you offer them incentives and make them feel valued?

Con: When you're planning on launching a loyalty program, be sure you know the associated costs and if the potential revenue is worth the investment. Does an expensive app that occasionally gives away a free product, prize or discount lead to more revenue? Depending on your industry, loyalty might not mean what you think it does.

Byron Sharp's book "How Brands Grow" was released in 2005 and used data to dispel some of the notions businesses have long had about customer loyalty. More recently he said, "We are loyal switchers. We don't feel disloyal to Kellogg's if we buy another cereal." Basically, don't put all of your cereal in one bowl when it comes to who you're targeting — because they won't always purchase from you.

Customer Acquisition


Pro: While loyal customers might be the cornerstone of your business, you can't make your building bigger without adding more bricks. New customers are still a critical revenue stream whether they end up being hyper-loyal or not. You didn't get that loyal 20 percent without acquiring new customers to begin with. Plus, new customers are needed to sustain growth.

Con: Acquiring new customers is expensive compared to retaining existing customers. Because you've already earned their trust, existing customers are much more likely to buy from you, reducing marketing expenses in the process. According to the book "Marketing Metrics," the probability of selling to an existing customer is 60-70 percent. The probability of selling to a new prospect is 5-20 percent. That means you'll probably see less return on your marketing campaigns targeted at new customers.

Finding Balance


Maintaining loyal customers is important, but as you can see, balancing who you target can be a critical part of growing your business. While conventional thinking and research indicates that there's more revenue to be gained from loyal customers, you simply can't ignore future revenue streams, and loyalty programs can be expensive. Loyalty can also be fickle even with incentives.

To find the balance that works for your marketing, be sure you know where your revenue is coming from. Track incoming calls and web traffic from your various campaigns and sort them based on whether you were targeting existing or new customers. Once you know the value of each and every conversion, you can better balance your efforts.

Have you brought balance to your marketing? Have you lost loyal customers at the expense of discounts and deals offered to new customers? Let us know in the comments.