Tag Archives: customer retention marketing

Cost of Acquiring New Customers vs. Retaining

Illustration of happy customer.

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.

Customer Acquisition vs. Customer Retention [Infographic]

Customer Acquisition vs. Customer Retention -315

Customer Acquisition vs. Customer Retention -315Which is more effective, customer acquisition vs. customer retention? Only 18% of companies focus on the latter, while 40% focus on the former.

The Costs

Yet, acquisition costs 5 times as much as retention. This is because marketing eats up a bulk of the budget, and not all people who are targeted by ads become customers. On the other hand, retention programs designed to keep existing customers happy often result in repeat purchases, along with word-of-mouth advertising that attracts new customers.

The Numbers

The numbers speak for themselves. Existing customers are 50% likelier to check out the new products and services of a brand they trust. They also spend 31% more money than new customers. This means that when customer retention increases by just 5%, businesses can increase profits by anywhere from 25% to 95%.

It’s more affordable to retain existing customers, and more profitable. So make sure loyalty pays for your current client base.

This infographic focuses in on customer acquisition vs. customer retention, courtesy of Invesp Consulting.

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Infographic by- Invesp