The cost of customer acquisition is skyrocketing. Why? Companies have more channels to create content from videos, blogs, email, paid and organic search to influencers, social media, and more. Increased competition, higher opt-out rates, and the limited availability of lucrative channels like trade shows have also contributed to the rising costs.

To put things in perspective, the Wall Street Journal reported that loose-leaf tea seller Plum Deluxe used to gain a new customer for every $27 spent on Facebook and Instagram ads. That cost is now ten times higher, which has led the company to cut its spending. Many organizations face the same challenge. According to Profitwell, customer acquisition costs are nearly 70% higher for B2B companies and more than 60% higher for B2C companies than they were just six years ago.

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Customer acquisition costs are nearly 70% higher for B2B companies and more than 60% higher for B2C companies than they were just six years ago.

Source: ProfitWell

Churn Matters

Every company loses customers which means it has churn. It’s a cost of doing business. But the way you view churn and how, and if, you proactively address it can make all the difference. This guide is designed to help you fully realize the impact churn has on your growth strategy, as well as provide practical tips on how to reduce churn.

Churn is important because it affects your company’s profitability. Most B2C organizations lose 60%+ of their new customers annually. If you’re losing 60%+ of the customers that come in the door, you’re continually throwing 60%+ of your budget dollars away.

Existing customers buy 90% more frequently, spend 60% more per transaction, and bring in 23% more total revenue and profitability than newer customers.

Most B2C organizations lose 60%+ of their new customers annually.

Data is at the heart of measuring, understanding, and minimizing churn. The more you learn about your customers and their behavior, the better you can forecast and influence future expected revenue.

quote mart

“Churn happens throughout the customer journey but there are two places where churn happens that you can’t afford to ignore. The first is one we all know—it’s with our best customers. Most organizations work hard to keep their best customers. The other isn’t as well recognized. It’s at the first and second transaction. This is where companies are losing 60% or more of their customers. The real kicker here is that most companies don’t recognize churn as a retention problem, they see it as an acquisition issue.”


Erin Raese

SVP of Growth, Annex Cloud

Acquisition or Retention—A Shift In Perspective

We’ve heard over and over again from CMOs across all industries, “I don’t have a retention problem, I have an acquisition problem”. Many of these CMOs have strong loyalty strategies, however, they see loyalty and retention as something that happens later in the customer journey or lifetime with the brand—after the sixth or tenth purchase, or perhaps even after a year or two of being a customer. Their loyalty strategy is relegated to the back end of the lifecycle, with the sole purpose of putting a fence around their best customers. While this is super important, they’re missing the opportunity that a strong loyalty strategy can bring to the early stages of the customer lifecycle.

If you define early stage churn as an acquisition problem, ask yourself a few simple questions.

  • arrow Why wait to get to know your customer?
  • arrow Why wait to make a positive, impactful impression?
  • arrow When you meet someone for the first time, do you just say hello and walk away? Or do you stand there, ask them a few questions, and get to know the person?
  • arrow Why would you want your customers’ experiences to be any different?

Engaging customers at their first touchpoints with your brand, in and around their first purchase, will make a positive impression on a customer, beginning the two-way value exchange necessary to build a long, profitable relationship. Adding value by putting a retention or loyalty focus on early churn, instead of looking at it as an acquisition problem, prevents a lifelong customer expectation of discounts to continually win their business.

Yet, so many organizations don’t recognize or fail to seize this opportunity.

quote mark

“The most successful brands look at loyalty and address churn starting day one, and see them as an integral part of their growth strategy.”


Erin Raese

SVP of Growth, Annex Cloud

A first-time customer has a 27% chance of returning. If you can get the customer to come back and make a second or third purchase, the chance of making another purchase jumps to 54%.

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