The double jeopardy effect that pays twice

When your business is focused on growth, the question that always pops up is:

Acquisition or retention?

As a marketer, I’ve heard this discussed a million times but I've not considered it through the lens of double jeopardy... until now. And that's why I want to tell you why acquisition always trumps retention for growth.

If growth is your goal, acquisition trumps all

There are two key marketing levers in this debate:

1. the penetration lever (acquisition of non buyers) and
2. the loyalty lever (retention of existing customers).

While both are important, smaller brands often mistakenly assume that they need to invest heavily in retention because of the precious few customers they have. However, research shows that the loyalty metrics of smaller brands are largely similar to those of bigger brands, relative to their size. That’s where the concept of double jeopardy comes into play.

What is double jeopardy?

In marketing, double jeopardy refers to this:

Smaller brands with fewer customers experience similar relative customer loyalty (compared to larger brands).

This challenges the notion that loyalty is purely enjoyed by big brands. In fact, the real driver of growth (market share) isn’t increasing loyalty - it’s increasing penetration.

Acquisition vs. retention: Why acquisition wins for growth

If your business objective is growth, acquisition strategies are 2X as effective as retention strategies. This is because your advertising, messaging and content that's designed for non buyers will inevitably reach your existing customers as well.

Here’s the magic: your current customers are often more 'mentally available' to your brand, meaning they’re more likely to notice you - even when those messages aren’t specifically aimed at them.

Think of it as hitting two birds with one stone. Your acquisition efforts not only capture new customers but also keep your brand top of mind with existing ones, thanks to their mental availability towards your brand.

The power of mental availability

The mental availability of your brand is the bank of memories linked to your brand in the minds of your total addressable market. It’s why, when you’re in the market for an electric car, you suddenly start noticing electric cars everywhere - on the road, in ads or on social media. This heightened awareness is due to your reticular activating system (RAS), which primes you to notice things relevant to your current needs or interests.

Pretty clever stuff.

Similarly, your existing customers, with their RAS activated, are more attuned to noticing your brand’s advertising. So, when you invest in acquisition, you’re still reaching those customers and keeping them engaged without the need for a separate retention strategy.

This is especially helpful for smaller brands that have limited resources.

Is a bird in hand really better than two in the bush?

So, what about the 80/20 rule we were all taught back in the day?

I remember my days of studying marketing theory that preached that it's easier to sell more to an existing customer than it is to acquire a new one.

Let’s be real - there’s limited value in focusing marketing efforts on upselling and cross selling to existing customers when:

1. That customer might not need more of your product or service.

2. The effort to acquire new buyers will always outweigh the loss from defecting customers.

Churn happens. But it's often due to external factors beyond your brand’s control. Instead of pouring resources into chasing that runaway customer or getting more out of an existing customer, your time and budget are better spent encouraging new buyers to fill that gap.

Acquisition for exceptional growth

At the end of the day, it's pretty simple maths. Most marketing activities that reach non buyers also reach and impact your current customer base. The reverse isn't true. An email out to your customer base will have zero impact on acquiring new buyers.

The only difference between the two is how receptive each group is to your advertising.

So if you’re serious about growth, focusing on acquisition is the smartest move you can make as a CMO because it naturally assists with retention strategies anyway. It's a strategy that pays off twice as effectively thanks to double jeopardy.

The moral of the story?

Two in the bush is probably better than one in the hand.

If you're curious about the science behind this, I recommend reading more in this excellent article by Alicia Barker. Let's start thinking about acquisition as the lever that truly drives brand growth.

#Marketing #BrandStrategy #CMO #GrowthMarketing #DoubleJeopardy