Retention vs Acquisition: Where Email Marketing Delivers More Revenue in 2025

Every marketing leader I talk to in 2025 faces the same dilemma: should we keep pouring budget into acquiring new customers, or focus more on retaining the ones we already worked hard to win?

Ad costs are climbing, competition for attention is fiercer than ever, and inboxes are crowded with brands all fighting for a click. At the same time, the brands that master retention are seeing compounding growth — repeat purchases, higher lifetime value, and more predictable revenue.

This is where email becomes a game-changer. Unlike paid ads, you own the channel. Unlike social, you’re not at the mercy of an algorithm. And when used strategically, email marketing can fuel both sides of the equation: converting new leads into first-time buyers and turning one-time buyers into loyal advocates.

In this article, I’ll break down the real comparison of email marketing retention vs acquisition in 2025, show you where the bigger revenue opportunities lie, and share how leading brands use platforms like Klaviyo to strike the right balance.

Why the Retention vs Acquisition Question Matters Now

In 2025, several forces are pushing brands to re-evaluate how much to invest in acquiring new customers vs retaining existing ones, particularly through email marketing:

1. Rising acquisition costs. Advertising platforms (social, search, display) have gotten more expensive. Competition for clicks and impressions is intensifying. Brands are paying more per lead and per first purchase.
2. Email as an owned channel gives leverage. Once a subscriber is in your email list, you have far more control: you own the inbox, not the ad auction. Thus, the email marketing retention vs acquisition conversation is less about either/or and more about how email can help maximize the value of paid acquisition.
3. Automation, AI, privacy & deliverability shifts. With privacy regulations tightening (e.g. state laws in the U.S.), cookie deprecation, and stricter inbox behaviour rules, acquiring new customers is riskier; retaining and re-engaging customers (who have consented) becomes more cost-efficient. Klaviyo and similar platforms are increasingly emphasizing retention flows, segmentation, personalization. (Klaviyo itself published “8 customer retention strategies to offset rising acquisition costs”). (Klaviyo)
4. Evidence of ROI. Email marketing ROI remains among the highest in digital marketing. Across sectors, brands report $36 return for every $1 spent on average, sometimes more in retail / e-commerce.
5. Ad spend alone is often under-leveraged. Brands usually already spend a substantial budget to acquire (ads, campaigns). But often, they stop short of maximizing how much revenue those acquired leads / customers can deliver via email. If you acquire customers / leads, letting email channels do less of the lift is leaving money on the table.

Because of these realities, the debate over email marketing retention vs acquisition isn’t theoretical — it has immediate implications for budget allocation, channel strategy, and profit margins.

How Email Performs for Retention

Here’s what I see when I focus email marketing resources primarily toward retention (existing customers, repeat purchasers, subscribers):

• Lower cost, higher margin touchpoints. Once someone is in your system, sending an email costs little per additional send; incremental costs are largely human time / content / design / platform usage. No bidding wars.
• Strong LTV (lifetime value) uplift. For many brands, retention email flows such as post-purchase, cross-sell / upsell, replenishment, VIP nurturing, win-back yield large chunks of revenue. The folks who already bought once are far more likely to buy again than cold leads.
• Automated flows multiply revenue. For example, Club L (fashion brand) switched to Klaviyo, built flows (welcome, abandoned cart, loyalty rewards), improved segmentation & personalization. Within a year, email & SMS contributed 33% of total direct-to-consumer (DTC) revenue, with two automated flows (welcome + abandoned cart) generating about two-thirds of that. (Klaviyo)
• Segmentation yields big lifts. Example: Swanky agency’s Klaviyo email segmentation case study saw a 323% improvement in attributed conversions through advanced segmentation & flows. (Swanky)
• Retention reduces churn & stabilizes revenue. Multiple studies show that improving retention (just a few percent) tends to have outsized effects on profitability, because the cost to serve that customer tends to drop over time and word-of-mouth / repeat purchases cost less in marketing investment.
• Deliverability, inbox behavior favor retention content. Because existing customers more often open, engage with brand content; subject lines, personalization, expected content tend to reduce spam complaints / fatigue. Gmail and other inbox providers evaluate engagement, so active interacting subscribers help deliverability, which cycles back into higher open rates and conversions.

How Email Contributes to Acquisition — What It Can & What It Can’t

Acquisition is about bringing in new customers / new leads. Email plays in acquisition both directly and as a support channel. Here are arguments, evidence, and also limitations:

Arguments for email’s role in acquisition:

• You’ve already paid for traffic/ad spend. Paid acquisition is expensive, but once you have leads or first-time buyers, email acquisition support (welcome series, nurture flows) helps you “get more out of what you paid for”. That is, you’ve already incurred the acquisition cost; email helps convert & up-sell from those acquired.
• Emails to new leads often have high early engagement. Welcome emails typically see higher open rates, higher conversion rates than many later campaigns, because of novelty / expectation. These emails can help build trust, establish brand voice, reduce friction, collect more data.
• Lead nurturing works. Not all acquisition revenue comes immediately — nurturing campaigns convert leads into buyers over time. Email marketing acquisition (via nurture) often has better cost per conversion than cold ads or direct outreach.
• Email supports omnichannel acquisition. Often, email capture is part of acquisition funnels (pop-ups, landing pages, referrals). Once captured, email plays a supporting role: reminding, offering first-order discounts, etc.

Limitations to watch out:

• Acquisition costs are variable and rising. If your ad spend goes up, your ROI on new customers falls unless you also optimize email capture and follow-up.
• Paying for traffic without follow-up is wasteful. If you buy clicks / leads but do not nurture them well via email (welcome flows, onboarding, reminders), much of that acquisition investment is lost.
• First order vs repeat order margin. First purchase often has lower margin (discounts, shipping, acquisition cost) than repeat buyers. So though acquisition delivers gross revenue, the net profit often lags retention unless you have high retention or high repeat purchase rate.
• Scale & saturation issues. There’s a limit to how many new customers you can acquire profitably, especially in competitive niches. At some point, diminishing returns set in. Retention tends to have more stable marginal returns once flows and infrastructure are optimized.

Side-by-Side Comparison Table: Retention vs Acquisition

Here’s a comparison of key metrics, with typical ranges and sources, for email marketing retention vs acquisition or email-supported acquisition. These are approximate, based on recent benchmark data; your results will vary by industry, list quality, offer, etc.

Klaviyo Playbook: Flows, Segmentation, & Maximizing Both Retention & Acquisition via Email

As someone running an email marketing agency, here’s how I’d structure a playbook for any business (small through enterprise) using Klaviyo (or a comparable platform), to make the email marketing retention vs acquisition balance work best.

Key Email Flows & Segments

Budget / Resource Allocation Rules of Thumb

• Setup & foundational flows (welcome, abandoned cart, post-purchase): budget upfront (both time + content). These are heavy lifters for retention and acquisition support.
• Ongoing campaign content (promos, newsletters, product launches): these support both retention and acquisition (by reinforcing brand, educating new leads).
• Segmentation & personalization investment: high priority. Better segmentation often doubles or more conversion rates vs generic lists.

In many brands I consult with, a split like 60-70% of email dollars / effort toward retention flows and 30-40% toward acquisition / nurture is optimal once acquisition channels are reliable. For startups or new brands, the split initially will be more acquisition heavy (to fill the funnel), but one should shift toward retention as soon as possible.

Email marketing is a strong acquisition support and email must be a part of acquisition strategy.

Brands are already spending money on ads / paid acquisition; that traffic / leads are not free. So email must “do more work” to squeeze maximum value from what’s already been bought.

• If a brand has already bought clicks or leads, but then doesn’t follow up via email (welcome, nurture, re-engagement), much of the acquisition spend may be wasted. The ROI of acquisition is supremely dependent on post-acquisition follow-through.
• Emails to those newly acquired leads often have among the highest open rates / click-through rates, because the brand is fresh in mind. Getting those early touches right (welcome series with value, confirmation, first purchase incentives) can dramatically lower cost per new sale from those leads.
• By maximizing revenue from acquired customers (repeat purchases, cross-sell, upsell), you effectively amortize acquisition cost over multiple purchases. The more you retain, the less you pay per retained customer over lifetime vs paying to acquire new customers repeatedly.

So indeed, acquisition is necessary — but only if paired with strong retention / email support. In 2025, I consider email marketing acquisition support not optional, but a must-have for any brand spending on acquisition.

Case Study: Club L London (Fashion e-Commerce Brand)

To bring everything together, here’s a concrete example:

• Before: Club L was heavily reliant on paid advertising / social media to generate first purchases. Email contributed relatively little.
• Action: Switched to Klaviyo. Set up automated flows (welcome series, abandoned cart, loyalty/rewards integration, re-engagement). Improved segmentation & personalization. (Klaviyo)
• Outcome (1 year): Email + SMS contribute 33% of direct-to-consumer revenue. The welcome and abandoned cart flows together drive about two-thirds of that email-SMS revenue. Also, open rates increased (~40% improvement) after implementing better personalization and flow structure. (Klaviyo)

This shows email marketing retention power, and that acquisition spend (ads, etc.) already in play got leveraged more effectively through email flows and retention efforts.

Budget & Allocation Guidance

Here are guidelines I use when giving recommendations to clients, regardless of business size, about how to allocate marketing budget between acquisition vs retention via email marketing in 2025.

These proportions are not rigid; each brand must adjust them depending on industry, margins, customer lifetime, product type, and competitive dynamics. But across many brands, shifting toward retention produces better long-term revenue, margin, and predictability.

If you want, IMPRO Email Agency can run a free audit of your email program to show where your biggest revenue gaps are.

Final Thoughts

In 2025, the evidence is clear: email marketing retention tends to deliver more reliable revenue, better margins, and faster payback than acquisition alone.

But acquisition remains essential — especially when you already have ad spend/input into your funnel. The sweet spot is a strategic balance: leverage acquisition channels but ensure email marketing retention vs acquisition support (nurture, flows, segmentation) are maximized.

Build a strong foundation of retention via email, then lean into smart acquisition support. That’s the strategy that wins in both top-line and bottom-line in 2025.