Why Acquisition Outpaces Loyalty as a Growth Driver

The Gap: Focusing on Loyalty When Growth is the Goal

No matter the industry or product, one ambition sits at the heart of every business: growth. When crafting strategies to drive that growth, one of the key levers marketers must consider is balancing loyalty marketing with customer acquisition.

Many marketers default to focusing on loyalty-focused strategies, and for understandable reasons. As signal loss increases, it’s an effective way to capitalize on the gold standard of customer data with readily available CRM lists. Focusing on existing customers is often more economically attractive than acquiring new ones, as existing customers tend to generate more value per customer. And as measurement challenges persist, targeting existing buyers often leads to clean attribution numbers that look good on a report.

Still, metrics that look efficient on paper don’t always reflect real business growth. A retargeted customer may convert, but that doesn't always mean marketing drove the sale—loyal customers often buy again regardless, inflating attribution metrics without creating incremental revenue. As such, when brands lean too heavily into loyalty marketing, they risk artificially boosting short-term metrics at the expense of true growth.

At the same time, for products where usage frequency is limited, there’s only so much room to grow by nudging existing customers to buy a little more often. How often can someone be convinced to buy new running shoes or a new mattress? For these brands, trying to squeeze more purchases out of existing customers is often a wasted effort.

Ultimately, while focusing on loyalty may seem like the safe, efficient play, it can funnel time, effort, and money into strategies that don’t meaningfully expand the business. Loyalty strategies can feel safer and easier to justify, but growth depends on reaching new customers, not just retaining existing ones.

The Bridge: Growth Comes from Expanding the Customer Base

Across categories, market penetration—not loyalty—is the primary driver of brand growth. Even more, marketing tactics aimed at new customer acquisition tend to support retention as well.

The payoff is clearest when reaching potential new buyers, for two main reasons:

• New and light buyers drive the most growth: Heavy buyers are already engaged, and advertising often won’t push their frequency meaningfully higher. Light or lapsed buyers, by contrast, are less likely to have the brand top of mind and, as a result, are more responsive to advertising. These are the consumers that can deliver incremental sales.
• Advertising is best suited to acquisition: Owned channels (like email or loyalty apps) are better equipped for nurturing existing customers—and with a far better ROI—while paid media can extend reach to people who haven’t yet chosen a brand.

There is one exception to this rule: Smaller brands, with a limited customer base and higher churn, often need to lean more on retention tactics to offset brand switching. But for most advertisers, acquisition should be the priority if the goal is meaningful, sustainable growth.

The Destination: Growth That Scales

Real growth happens when brands focus less on deepening loyalty and more on expanding their customer base. Loyalty marketing remains a crucial part of any marketing strategy, but when the goal is expansion, acquisition should lead.

Consider a regional furniture retailer with a $100,000 quarterly media budget. They could allocate a portion of that budget to strategically retargeting the 50,000 customers in their CRM who've purchased in the last two years. But the bulk of their investments should focus on reaching the hundreds of thousands of potential customers in their market who've never visited their store. Shifting to acquisition-focused strategies may be a more challenging sell to leadership, as the metrics may look less efficient on paper and require larger budgets to reach new audiences. But in the long term, such an approach builds net-new customer relationships that drive more meaningful long-term growth.

One way to balance efficiency with acquisition is to utilize lookalike audiences. The retailer can use their CRM data to find people who share characteristics with their best customers but haven't purchased yet. This leverages first-party data while still prioritizing new customer acquisition, helping to efficiently convert prospects who are likely to respond.

That's the difference between looking efficient and actually growing. Marketers should ask themselves: Are we chasing attribution metrics that flatter short-term performance, or investing in strategies that build long-term growth? In most cases, the latter means putting acquisition front and center.

Making Marketing a Growth Driver

Loyalty marketing will always have an important part to play in marketing strategies. It builds trust, strengthens retention, and helps brands stay top of mind. But when growth is the goal, focusing on customer expansion is the best course of action.

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Leveraging relative advantage is another approach marketers can take to drive growth—especially when budgets are tight. Check out my article, The Power of Relative Advantage in a Turbulent Economy, to learn how marketers are gaining ground by spending smarter when they can’t spend more.