Why do 70% of Business Owners Focus more on Customer Acquisition instead of Customer Retention?
The majority of business owners focus more on getting more customers, more sales, and traffic than retaining the ones they already have.
It's not a bad strategy and also not a good strategy.
Let's take a look at these statistics from theoutboundengine;
- Acquiring a new customer can cost five times more than retaining an existing customer.
- Increasing customer retention by 5% can increase profits from 25–to 95%.
- 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 5–20%.
- One customer experience agency 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.
- U.S. companies lose $136.8 billion per year due to avoidable consumer switching.
- American Express found that 33% of customers will consider switching companies after just one instance of poor customer service.
From the analytics above you’d notice business owners lose a lot of money just because they can’t retain customers and have poor customer service.
The data above shows that retaining customers is just as important as, if not more important than, acquiring new ones. So why do so many businesses focus mostly on acquisition and neglect marketing that keeps customers loyal?
Is it because they think the more reach they get the more sales they make?
Do they know that converting a new customer is more hectic than converting a warm customer?
The bottom line is companies should not only focus on building good customer relationships but also focus on acquiring new customers.
Both are great for growth!
Use the scale wisely.