There’s always a big push for companies to find more customers. It makes sense—more customers translates to more revenue, right? In reality landing new customers is difficult. A Bank Intelligence Solutions (BIS) study found that it costs a company 8 to 10 times more to land a new customer than to sell to a current customer. Some other sources put that number as high as 30. Customer retention is much more cost effective than finding new customers. Let’s look at three reasons for this.
- To land a new customer, you first have to find them. Whether it’s an email campaign, a list of prospective clients or cold calling, it takes time and money. You already have a current customer database that you have built and it doesn’t cost a dime.
- Current customers know you. They already trust your business and are much more likely to purchase additional services or products. The goodwill and trust you have put forth translates to greater profits.
- Current customers are usually in it for the long haul. Selling to an existing customer faces a probability of 60-70%. Selling to new customers is much lower at 5-20% according to Marketing Metrics, a book by Paul Farris. New customers may come and go. They may try out your product or service then head for the hills.
Too many companies focus heavily on customer acquisition rather than retaining current customers. It may be time to look at your current strategy to make sure you are giving equal attention to both strategies. We know every business needs new customers to grow. Turning some of that attention to the current customer side makes sense, too.
Coolfront Technologies offers two great ways to retain your current customers while putting more money in your pocket. Check out our new Coolfront Moments and Coolfront Agreements videos to get started.