Jan
24
The Cost of New Customer Acquisition

Posted by: Eva Prada      January 24, 2018

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Want to significantly improve your marketing ROI? Concentrate some of your efforts on the customers who you already have. Keeping existing customers happy is far more cost-effective than constantly chasing new ones.

Cost of Acquisition vs Retention

It can cost as much as five time as much to bring a new customer to your brand as it can to keep a current one. And, the value of a customer just keeps increasing as they stay with your brand. According to Bain and Company, the average customer spends 67% more in the 31st through 36th month of their relationship with you than they do in the first through sixth month.

It's also far easier to sell to someone who has done business with you before than it is to start a relationship with someone new. When you are dealing with a new prospect, you have a 5 to 20% chance of making the sale. With an established client receiving a new promotion, that jumps to 60 to 70%.

The customers who you can keep are the lifeblood of your company. The Pareto Principle applies here: 80% of your company's future profits will come from just 20% of your customer base. 

Happy Customers Act as Ambassadors

Keeping your customer happy doesn't just keep that customer onboard. It also makes them into passionate advocates of your brand. A recent Harris Poll shows that 80% of people seek a recommendation from a friend or family member when they make a purchase. Your clients, when they are happy with your customer service and products, are more likely to offer a customer referral. Their recommendations have a power that your advertising cannot match.

Why Customers Leave

Around four out of every five consumers say that they've stopped doing business with a company due to poor customer service. There are a number of triggers that can cause your clients to bail, but the most common include:

  • Rude interactions with staff. Seventy-three percent say that they've left a business when staff was rude to them.
  • Unresolved issues. Around half say that a failure to correct a problem in a timely fashion will make them leave.
  • Unknowledgeable staff. When your staff doesn't have the information to help a customer, 51% say that sends them out the door.

If your company is guilty of one or more of these lapses in customer service, you will see your number of happy, repeat customers drop dramatically. In some cases, if a customer service interaction is handled badly, you will not get another chance. Eight percent of respondents to the survey referenced above say that they will not come back to a brand after a bad experience.

And, customers' social reach cuts both ways. Just as a current customer can become an ambassador, a disgruntled one can become a liability. People are 50% more likely to share a bad experience with a company on social media than they are a good one. 

How to Keep Your Customers Happy

Just as there are behaviors that will send people away from a brand, there are others that will keep them happy and coming back for years on end. A few of the top reasons people stick with a brand:

  • Personalized experiences. When a customer feels that they are getting personal attention and that their specific needs are being met, they are more likely to develop a warm relationship with a brand.
  • Friendly employees. Whether your employees are communicating in person, on the phone, through email or through chat, they should endeavor to be pleasant and helpful at all times.
  • Easy to find information. Make sure that your website is easy to navigate and contains the information that customers need. They should always be able to quickly and easily find the answers to questions about your products, your policies and their orders. 
  • A good reputation. Even if a customer has not personally had a bad experience, hearing about others' bad experiences can make them wary. To keep your customers happy and comfortable, work to keep your reputation online positive.

In addition to these basic qualities, there are other perks that can keep people happy and returning. Loyalty programs, for instance, have a strong track record of keeping customers happy and coming back. Online advertising that offers discounts or other benefits to current customers can make a customer more likely to click your ads and come back again. Specially curated pages that show them offers relevant to their needs also bring people back.

You and your employees should continually hone your business practices to always give customers the best experience possible with your brand. When you eliminate the negatives that keep people away and work on the positives that keep them coming back, you will find that your retention rate soars and your income per customer does, too.

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