“In a perfect world, it’s both and everything in between. In the real world the general marketing rule is that retention is a lot more cost effective than acquisition…”
Carde Johnson – Forrester Research
I liked the Chart on Flowtown titled The Value of an Existing Customer.
Some very powerful statistics are spelled out in the graph. It costs six or severn times more to acquire a new customer than to maintain an existing one and a slight increase of 5% in customer retention can result in a profit increase of up to 95%.
Peter Drucker stated that the purpose of business is to create and keep customers. Business needs to understand customer acquisition is important. For without customers, no business will survive. Business also needs to understand customer retention is even more vital as if you are losing them, you are back to ground zero, Loyal customers are the life blood of any business and they create real values and drives revenue. Businesses need to work their due diligence to keep them and the cost of losing one customer translates to a spending of 6, 7 times more acquiring a new one.
Your loyal customers will spend more money with you, they cost you less to gain repeat business from, and they’re probably more loyal and less sensitive to price than new customers. This cannot be more true.
Loyal customers always return & become a dependable lifetime sales stream and they brag about your service/product creating Word of Mouth advertising which is the most effective advertising, and it is free!
Every business should put their existing customers at the heart of their marketing strategy. Customer Loyalty is the strategic competitive advantage of any business.