Throughout the few times I’ve filled in the customer relationships box in the business model canvas, I have always wondered what is the relationship between customer acquisition and customer retention? In Amy Gallo’s article found in the HBR blog network,  she discusses the importance of targeting the right audience initially to reduce consequences for the future, should the target market fails.

Depending on the industry, customer acquisition costs is anywhere from 5% to 25% more expensive than retaining an existing customer. In other words, it is important to keep the right customers by targeting the correct market initially. Companies measure the percentage of customers that end their relationship with a company for a given period by using the customer churn rate. It is calculated by: total number of customers who left company during a period divided by total customers at the beginning of the period. This is one of many ways for a company  to measure the performance of a company (marketing and financial aspects)  as discussed in class 17. 

Many of Groupon’s clients fail to target the right customers . As Groupon targets deal seekers who simply “come and go” to find better deals, it becomes problematic as customers leave when a better deal is found. As a result, there is a high churn rate due to poor acquisition model. Although Groupon bring visibility for their clients, often those customers are “high churning” who will leave if no further deals are granted.

The main goal for businesses: bring in and keep customers who they can provide value to and who are valuable to the company 

Works Cited