Customer Retention V Customer Acquisition
Author Shannon Valentine
Tues 13th February 2018
Did you know, it costs five times as much to attract a new customer than to keep an existing one? (Invesp)
A scary statistic when you say it out loud! Without solid customer retention, you’re likely to waste money on acquisition, missing out on the lowest cost driver of growth.
However, without some degree of acquisition, you won’t have customers to retain, but it is easy for your acquisition costs to spiral out of control.
Many businesses believe client acquisition is more important. They will focus their attention on new customers rather than loyal ones they already have.
To run a successful business, it looks as if you’ll have to find the perfect balance between acquisition and retention. But which is more costly?
To acquire new clients, businesses must invest time and money in generating leads through advertising, following up leads through direct marketing and converting leads to customers via a sales plan.
For customer retention, to sell more to an existing customer base, businesses must capitalise communications, keep up their high level of service and make customers aware of new services or products.According to Invesp, the likelihood of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is a mere 5-20%. Click To Tweet
With retention, how will you increase sales, boost engagement, and generate referrals? Perhaps you could introduce a loyalty program. Is it possible to add more personalization to your services? Will engaging with people more on social media help? 88% of companies see customer experience as a critical factor in driving customer loyalty and retention, with 37% of customers finding the use of social media most effective to get their attention.
If customers are happy, they are most likely to share their experience with friends and family. With a positive light shining on your business, you can gain a new customer base without splurging on marketing tools to increase acquisition.
How can a company attract new business while retaining customers?
There is not a magic formula for attracting and retaining customers, but there are some fundamentals that we all, from time to time, could do with remembering:
- Provide a great product or service. If your product or service isn’t right, it doesn’t matter what you do to try to gain customers; they will quickly lose interest. Check your process, package and price is right, and be prepared to change it sometimes before hitting the right formula.
- Offer great customer experiences. Often, customers don’t return because they had a disappointing experience with a company. This goes together with having the right product or service. If your product is great, but you treat your customers poorly, you probably won’t be seeing them anytime soon, if ever.
IT TAKES 12 POSITIVE EXPERIENCES TO MAKE UP FOR ONE UNRESOLVED NEGATIVE EXPERIENCE – “Understand Customers” – Ruby Newell-Legner
- Communicate with your customers based on their preferences. Depending on your business, customers may prefer one way or another, such as text or email, and you should adapt to their preferences.
- Give them a reason to stay or come back. After providing consumers with an impeccable service or product, ensure that you have a top notch after sales process. You can offer them a new service they hadn’t yet thought about, give them first dibs on new products, send out promotions or merely go and have a cuppa with them once in a while. For the FMCG industry consider using a loyalty or reward schemes to create offers for customers to keep coming back. Whatever you do make sure you do it well.
- Keep your brand in the limelight…for the right reasons. Brand reputation and management is key. One way to ensure that your brand is always in the limelight is actually quite easy. From PR to brand and employee advocates. Ensuring that people (and the press) are spreading positivity about your brand is only going increase the trust your customers have with you and save some time winning new ones.
High street brand, Next, has managed to find the balance between the two, giving out ‘First-time surfer’ vouchers. This is strictly for first-time buyers, which offers £10 off a £15 or more spend. Not forgetting existing customers, they will provide those who have already bought from next £20 off a £50 spend.
Keep you customers engaged and loyal with a personalised digital experience
Four vanity metrics that you need to stop tracking now! Four vanity metrics that you need to stop tracking now! Vanity metrics are data based on nothing more than the numbers you see. Often they mean nothing without digging much deeper into your analytics. In this...
Work on your personal brand and become a thought leader. Work on your personal brand and become a thought leader. That is a lot of buzz words in one neat blog title. But in short, you, your career, how you communicate, present yourself and go about your business all...