We all know that Customer Retention is an Important Thing, but sometimes it gets lost in the Gold Rush of acquiring more and NEW customers. Because new is always better, right!?
Not right. Oh, so not right.
Did you know that it’s been proven that acquiring a new customer costs between four and SEVEN times as much as retaining an existing one. So keeping the ones you already have, happier, is a really fast way to reduce the customer acquisition element of your cost of sales by over 75%. Just imagine the effect that would have on your profitability (and your time management).
Combine that with this rather stunning statistic – that increasing customer retention by just 5% can grow your profits by between 25% and 95% – and all of a sudden there’s a seriously solid case for paying an awful lot of attention to the customers you’ve already got. Finally, it’s also true that nearly two thirds of an average company’s sales come from their existing customers.
Customer attrition is often referred to as ‘Churn-Rate’. And a fundamentally important part of maximising your profits is to reduce that churn rate to a minimum. Typically businesses will have an approximately 20% churn rate per year, caused almost entirely by the fact that they didn’t pay enough attention to their existing customers.
But… so many times a company will offer lovely, glittery, sparkly and wonderful gifts to entice new customers while deliberately ignoring their existing ones.
It just doesn’t make sense, on any level. Now… there’s nothing wrong with ambition, or with scaling a business and there’s certainly nothing wrong with finding new customers. And if you start the relationship with them properly, then they should migrate easily and naturally to becoming loyal customers – more on that later.
But finding new customers makes no financial sense, if it’s at the expense of your existing clients.
You must have heard the saying ‘A bird in the hand is worth two in the bush’? Well, if you stop feeding that bird in your hand, odds are, it’ll fly away, straight into to your competitor’s hand. If you need something from a business on a regular basis, and all that you can see is that business offering discounts and signup bonuses to new customers, while refusing to share them with you, then you have every right to take your money elsewhere.