6 Reasons to Focus on Customer Retention vs. Customer Acquisition

Many businesses spend the majority of their time and resources on acquiring new customers, all while ignoring the ones they currently have. They fail to recognize that repeat customers are one of the greatest assets to their business.

Repeat customers can be your company’s biggest raving fans who promote your brand by word of mouth and ultimately lead to a higher return on investment.

The effort you put into nurturing your leads shouldn’t end after they make their first purchase. As a marketer, you must continue to nurture them and maintain a strong relationship with them to ensure brand loyalty. 

1. Acquiring a new client can cost 5x’s more than retaining an existing client.

2. Increasing customer retention by 5% can increase your profits by 25-95%.

3. The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is only 5-20%.

4. XM Institute found loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 4x as likely to refer, and 7x as likely to try a new offering.

5. U.S. companies lose $136.8 billion per year due to avoidable consumer switching.

6. American Express found 33% of customers will consider switching companies after just one instance of poor customer service.

While looking at these statistics, it makes more sense to focus your marketing efforts and budget to nurture your existing customers. They are repeatedly already spending their money on your goods or services. This doesn't mean you should not market to new potential clients, which is a must.

However, Forbes suggests, “these statistics should be taken into consideration when budgeting how much you spend on acquiring new customers versus taking care of your existing customer base". 

You already spent lots of marketing dollars acquiring your existing customers. When you do not follow up on these clients or do anything to foster brand loyalty, you lose that additional money. You might as well focus your time and efforts into making them a lifelong customer.

Overall, taking good care of your existing customers makes them happy and more likely to buy from you again. It also makes them more likely to recommend to you to their friends and family. In the long-run, focusing your efforts on customer retention vs. customer acquisition costs your business less and saves you time, money, and energy. It's a win-win for everyone.

Read article: 17 Best Customer Retention Strategies that Work