Abstract

Conventional wisdom suggests that retaining a customer is less expensive than acquiring a new one. However, this article argues that this assumption has been overgeneralized in relationship marketing and oversimplifies a far more complex cost dynamic. In an evolving technological, industry, employee, and customer landscape, the relative costs of selling and marketing to acquire and retain customers are contingent on multiple moderating factors. This conceptual review challenges the prevailing retention-dominant narrative by introducing a framework that identifies key moderators of the relationship between customer type (new vs. existing) and firm-level costs. Drawing from research in customer profitability analysis, relationship marketing, loyalty programs, and resource allocation, the framework highlights the importance of customer and employee heterogeneity, technological capabilities, and organizational constraints. The article integrates insights from these domains to provide a more nuanced understanding of when customer retention may be more efficient and when customer acquisition may be strategically justified. Implications for managerial decision-making are discussed, particularly in data-rich and AI-enabled environments. Directions for future research are offered to refine theory and guide empirical testing of boundary conditions surrounding acquisition and retention cost strategies.

Citation

Murray, R (2026), "Acquisition vs. Retention: Is Winning a New Customer Really Far More Expensive?", Journal of Empirical Generalisations in Marketing Science, Vol. 25, No. 1

Keywords

acquisition, customer costs, heuristic, retention