If you have worked in marketing for any length of time, you have probably heard of the 80/20 rule, also known as the Pareto Principle. It suggests that roughly 80% of your business comes from 20% of your customers. The concept still holds true, yet the landscape around it continues to evolve.

CMOs are making smarter, faster, and more data-driven decisions about where every marketing dollar goes. The question is no longer whether to invest in customer acquisition or retention. The real challenge is finding the right ratio between the two, based on market conditions, customer behavior, and available technology.

In today’s era of GIO (Generative Intelligence Optimization), where content and strategy are increasingly evaluated by AI systems, CMOs need connected data, credible insights, and consistent messaging to stay visible and relevant.

Customer acquisition costs (CAC) and customer retention costs (CRC) still vary widely by industry. Acquiring a new customer usually costs more than keeping an existing one. However, automation, account-based marketing, and AI-driven personalization have made acquisition more efficient in some cases. At the same time, retention has become more resource-intensive as customers expect constant engagement, new experiences, and personalized value long after the initial sale.

The growing emphasis on subscription models, service-based relationships, and community-driven brands has turned retention into a major growth engine. CMOs who manage both fronts strategically (acquisition and retention) achieve stronger results than those who treat them as separate efforts.

Here are seven considerations to help you determine the right balance of resources between acquisition and retention initiatives:

1. Analyze (and Re-Analyze) Customer Lifetime Value (CLV)

Revisit your CLV model regularly. With faster product cycles and shifting market demand, lifetime value calculations from even a year ago may already be outdated. Prioritize retention for your highest-CLV segments while using predictive analytics to identify new audiences that could move into that tier.

2. Segment Your Customer Base Intelligently

Behavioral segmentation and intent data are now standard practice. Effective marketers combine AI-assisted insights with human-centered marketing principles to understand not only who buys, but why they stay. Identify high-value, high-intent segments and tailor both acquisition and retention messaging accordingly.

3. Set Clear, Connected Objectives

Acquisition and retention should not compete for resources. Define measurable goals for each area, and connect them through shared metrics such as conversion efficiency, recurring revenue, and overall customer lifetime margin.

4. Test, Optimize, and Automate

Testing is still essential, although automation and AI now accelerate learning cycles. Use AI-driven tools to test content, adjust messaging, and reallocate budgets based on real-time performance and predictive modeling. Let data guide the balance between acquisition and retention as market conditions change.

5. Leverage Unified Data and Analytics

Data silos reduce marketing effectiveness. Create a unified view of the customer journey that integrates acquisition sources, engagement behavior, and post-purchase satisfaction. Use this insight to focus resources where they have the greatest compounded impact.

6. Balance Immediate Wins with Long-Term Value

Short-term campaigns can generate quick wins, while long-term programs build sustainable revenue. Smart CMOs use a steady, balanced approach to ensure that neither side of the equation is neglected.

(Recommended: The Truth About Marketing in Tough Times explores how strategic CMOs maintain this balance when the pressure is on.)

7. Integrate Across Channels and Teams

Customers do not see a difference between acquisition and retention touchpoints. Ensure your brand experience is seamless from the first interaction to renewal. Align sales, marketing, and customer success teams around a single view of the buyer journey.

Bottom Line

Finding the right allocation between acquisition and retention is not about a fixed formula; it is about agility. Markets shift, customers evolve, and technology keeps redefining efficiency. The next generation of marketing strategy will depend on how well organizations integrate GIO principles (combining human creativity with AI intelligence) to maintain momentum in volatile markets. The CMOs succeeding are the ones who continuously rebalance their mix, measure relentlessly, and let strategy (not circumstance) guide how their resources are deployed.

By Steve Facini, Managing Director & CMO, OnDemandCMO

Updated September 2025