10.6 Customer Acquisition, Customer Retention, and Lock-in

Customer acquisition and customer retention through lock-in are the two primary components of market share. Once customers have been acquired, the next step is to retain them. There has been an ongoing debate on whether to focus on acquisition or retention marketing.Lenskold (2003). Both are important. But there has been significant interest in retention because of the research findings on customer retention. For example, increasing customer retention by just 5% can increase profits by 25–95%.Reichheld and Schefter (2000).

The point is that customer retention should be a critical goal for all organizations. This is particularly true in the current business climate where substitute products and competition from unforeseen sources are the norm. Customer acquisition and customer retention are related to the development of a viable business model and having good products, good people, a good brand, successful marketing, a capable R&D process, and an efficient supply chain.