Every business should strive to maintain loyal, long-term relationships with its customers. The success of your business depends on maintaining a strong relationship with your current and past clients.
A satisfied customer can result in more sales opportunities and maintain loyalty and credibility. The cost of finding new customers is still higher for many small businesses than for nurturing existing customers. Your business goals should always be at the forefront of your mind.
The right customers are crucial to a company's success. The cost of acquiring a new customer varies from five to 25 times that of retaining an existing one but How does it work and how are companies using it?
Stats on customer acquisition & retention
The cost of acquiring a new customer can be five times higher than that of retaining an existing one.
- It is possible to increase profits by 25-95% by increasing customer retention by 5%.
- The success rate of an existing customer is 60%-70%, while the success rate of a new customer is 5-20%.
- Customer loyalty is 5x more likely to lead to repeat purchases, forgiveness, referrals, and trying new products than customer disloyalty.
- Every year, consumers switch providers for $136.8 billion in the U.S.
A customer who experiences poor customer service once may switch companies.
Based on the data, customer retention is just as important or even more important than acquiring new customers. Is it any wonder, then, why so many companies neglect long-term customer retention in favor of acquisition marketing?
Customer retention isn't as simple as you might think. You will have a nice group of promoters who will speak highly of you as you delight your current customers. Focus not just on retention, but also on delighting your customers.
Getting to know your buyers is the first step - read our guide to learn how.
Here's why attracting new customers can be so expensive
Your first instinct might be to focus on acquiring new clients rather than maintaining existing clients. Business growth depends just as much on gaining new customers as it does on retaining existing ones.
You might wonder whether some tactics for generating leads are worth it when they cost a lot.
How do you reward clients and partners for referrals? Retaining your existing customers can help you attract new ones. A referral fee or thank-you gift is likely to be charged if you send them one. It is common for these costs to accumulate quickly.
Running a website always entails costs. You can improve the performance of your website over time by maintaining, developing, and improving it over time. You begin to understand the actual costs by taking a closer look at how your website generates leads.
Check this out: What Does Good Customer Experience Look Like on Your Website?
Are you considering hiring a PR agency to help you spread the word about your business? That'll probably also cost a lot. Because they need to make a profit as well, the PR agency will probably charge you a hefty fee.
No matter how you market (it's outdated, but that's another story), there are costs involved:
A traditional marketing strategy may be more expensive than an inbound marketing strategy. Basically, you're throwing a lot of stuff at the wall in hopes of finding something that sticks, which means you don't know when you may find that one, amazing customer. Cold calling, direct mail, advertisements, etc. There is a cost associated with these tactics.
Despite its effectiveness, inbound marketing still incurs some costs. A blog, for instance, can be written by a team of writers. Producing eBooks, guides, and content offers. Marketing through social media, paid search, SEO, and email is crucial to customer acquisition.
Marketers are embracing event marketing nowadays, and it's easy to understand why.
- 84% of attendees say attending an event made them more positive about a brand, product, or service.
- A company's marketing budget averages 1.7 times what it spends on live events.
- Marketing events result in 70% of customers becoming regulars.
- Attendees report that 84% have a positive opinion of a company promoted at a networking event.
- 90% of marketers believe that live events help attendees network and establish relationships with each other.
That's just the tip of the iceberg.
You can measure the success of your events by comparing the cost of running them with the number of customers you acquired. A lighting, stage, sound, and audio system is a good place to start.
Providing food, renting a venue, paying guest speakers, and putting together invitations can quickly add up when you are trying to attract new customers. Don't skimp on your first impression.
What you may not know about the costs
Occasionally, you may have to pay extra fees to acquire a new customer instead of retaining an existing one.
Are you spending a lot of time making sales and acquiring new customers? Focusing too much on new customers can result in them neglecting those you already have. Your business could lose a lot of time and resources waiting for them to find a new customer.
Your sales team did well in acquiring that customer. That's awesome. As part of onboarding, you create all the necessary strategy components, facilitate regular meetings, and make sure the transition goes smoothly.
Think of it from your customer's perspective
You need to know how your customers learn, as well as how the business works. Learning about their industry is time-consuming, but it's worth the effort.
There is so much to do that I could be here all day. Budgets need to keep running for acquisition numbers to continue to grow.