Cost of Acquiring New Customers vs. Retaining

Illustration of happy customer.

Did you know that it costs 6-7-times more to get a new customer than retain one? It sounds unreal, but it’s true. The cost of acquiring new customers in today’s competitive market is extremely high to the extent that businesses are better off committing resources to retention campaigns. Some statistics even show that whereas you’re 60-70% likely to see a repeat purchase from existing customers, there’s only a 20-30% chance of selling to a new customer.

Ultimately, most businesses survive on purchases from a small group of loyal customers. According to Marketing Insights, 80% of a business’s profits come from 20% of the company’s existing customers.

Signal Mind delves deeper into these stats to help SMBs understand the value of customer retention and, after that, offers several tips to boost customer loyalty. The following are a few key takeaways from the blog.

Acquiring New Customers vs. Retaining

  • The average conversion rate from promotions sent to new customers is less than 1%.
  • Loyal customers are worth up to 10 times more than their first purchase, on average.
  • Retaining just 5% of your customers can increase your profitability by more than 25%.
  • A 10% rise in customer retention can yield a 30% increase in company value.

Check out the Signal Mind blog to learn more about customer acquisition vs. retention costs and the benefits of building a robust customer loyalty program.

About Mike Gingerich

Mike Gingerich, President of Digital Hill & TabSite is a business blogger Marketer and Consultant. Part geek, part marketer, part strategist, total fitness and running junkie. Mike is an author and speaker, having presented at Social Media Week Lima, Social Media Camp (Canada) and more. Mike is a marketing, social media, and business startup enthusiast with 10+ years experience building apps, consulting, and training businesses with winning integrated strategies. Mike loves deploying tactics to increase awareness, sales, and maximize ROI in both B2B and B2C markets via digital media.