I might not own a multi-million-pound empire but even I know that the first rule of any business is to retain customers and build loyal, lasting relationships with them. Delighting your customers can result in more sales opportunities and maintain loyalty and credibility.
And when it comes to attracting new customers vs. retaining them - the latter is cheaper when you delight them as it costs five times more to obtain a new customer than keep an existing one.
Why attracting new customers can cost a bomb
At first, it probably does make a lot of sense to spend all of your time, money and resources on getting new customers rather than focusing on the ones you already have. Sure, new customers are just as important to business growth as existing ones, but they do tend to come at a much greater cost.
Have you thought about how much you actually spend on generating new leads? Some of the tactics you might use can actually result in some pretty high costs which make you wonder if they’re even worth pursuing.
Do you have a type of client or partner referral programme? Great. Your existing customers are helping you bring in new ones. Chances are, these aren’t exactly ‘free’ if you send them some thank you gifts or a referral fee. These costs can rack up rather quickly.
Obviously, there are always costs associated with running your website. Hosting, development and continuing to fine-tune it every so often so it performs exactly how you want. But when you think about how leads find your website, then the real costs come to fruition.
SEO efforts. Email marketing. Google Adwords. Software to track how users interact with your website. All of these contribute to the costs of a sale.
Getting help from a PR agency to help get the word out there about your business? Yeah, that’s probably not going to be cheap either. After all, that PR agency needs to stay afloat as well, so they’ll probably charge you a hefty amount so they make a profit.
Regardless of whether you do marketing the traditional way (it’s outdated but that’s a different story), there are costs involved either way.
- Outbound: Traditional marketing might actually cost a lot more than inbound tactics. It’s mainly because you’re throwing a lot of sh*t at the wall to see what sticks, meaning you could continue spending until you find that one, amazing customer. Advertisements, direct mail, cold calling etc. These tactics aren’t cheap.
- Inbound: Inbound tactics can work wonders, but there are still some costs. Blogging regularly and having a team of writers to do that. Creating eBooks, guides and content offers. Using video marketing to your advantage. Utilising social media, paid search, SEO, email marketing - these are all common costs of acquiring new customers.
Event marketing is all the rage nowadays and it’s easy to see why.
- 70% of users become regular customers after a marketing event.
- 84% of attendees say they have a positive opinion about a company promoted at an event.
- 95% of marketers agree that live events provide attendees with valuable opportunities to form connections.
And that’s just scratching the surface.
As successful as they can be, take a step back and calculate the costs of running the event in comparison to how many customers you acquired through it. Lighting, stage, sound and audio equipment for starters.
Then hiring out a venue, potentially paying guest speakers, food and beverages, paying specialists to create invites - all of this can be really costly if you’re trying to acquire new customers. Especially since you’ll want to go all-out to leave a great first impression.
The not-so-obvious costs
There are also some little extras which can make it expensive to acquire new customers as opposed to retaining the ones you already have.
- Sales time: How much time is your sales team spending on making a sale and acquiring a new customer? Through no fault of their own, they might end up neglecting the ones you already have by focusing too much on new customers. It could take months for them to get your business a new customer which involves a lot of their time and the business’ resources being used up.
- Onboarding: So your sales team get that customer. Fantastic. Now comes the onboarding period where you spend time creating all of the important strategy bits, organising regular, back-and-forth visits and everything else which makes sure the onboarding is as smooth as possible.
- Understanding your customer: Then there’s the huge task of actually understanding your customer, how they learn best and also the ins-and-outs of their business. You won’t become an expert in the industry overnight, so the time you spend learning about them is valuable and time-consuming.
I could be here all day as the list could go on. To keep acquisition numbers growing, the budget also needs to keep running.
On the other hand, you don’t really need to onboard your existing customers as you’ve already done that part. You’ll also understand them by now too, especially if they’re sticking with you so none of the costs mentioned above really apply to customer retention.
Customer retention stats you need to be aware of
You could argue that customer retention is the new customer acquisition. You need to put just as much importance on retaining the customers you have as you do on bringing in new ones. Need a bit more proof on the difference in costs between customer acquisition and retention?
- It costs five times as much to attract a new customer than to keep an existing one.
- 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention.
- Only 40% of companies and 30% of agencies have an equal focus on acquisition and retention.
- 89% of companies see customer experience as a big factor in driving customer loyalty and retention.
- 76% of companies see customer lifetime value as an important concept in their business. And only 42% of them can measure it accurately.
- The probability of selling to an existing customer is 60-70% and only 5-20% when selling to a new prospect.
- Existing customers are 50% more likely to try new products and spend 31% more compared to new customers.
- Increasing customer retention rates by 5% increases profits by 25-95%.
- Over 70% of respondents agreed it’s cheaper to retain than acquire a new customer.
Yep, some pretty eye-opening stats in there that you might not have thought of before when it comes to retaining customers.
By honing in on your current customer base, you can delight them and once they’re happy, you’ll have yourself a nice bunch of promoters that will love to shout about your business and services. So, rather than just aiming for retention, aim for delight as they can act as your best marketers.
Ask for customer stories, make content easily shareable and inspire referrals. Moves like these can go a long way towards delighting customers rather than just retaining them.
The first move is to build trust through every step of the buyer’s journey - that’s where our guide can help.
Inbound 2.0 - delight your customer by taking your marketing to the next level
We’ve created Inbound 2.0 to make sure all of your marketing efforts and tactics are as effective as ever. Buyer personas, statistics, tips, tricks, best practices, ways to delight customers - it’s all in there.
To get your hands on a copy, click on the link below.