What is the Cost of Customer Acquisition vs Customer Retention?

What is the Cost of Customer Acquisition vs Customer Retention?

What is the cost of acquiring a new customer compared to the cost of keeping an existing customer?

An interesting article, that puts it all in perspective about the money spent on constantly acquiring new clients & customers & the value of taking care of your existing clients & customers.

Where would you rather spend your money?

There is no definitive answer to this question, but most sources say the answer is that it costs between 4 and 10 times more to acquire a new customer than it does to keep an existing one. Some sources say cost of acquiring a new customer is over 30 times that of keeping an existing one. A key element in the cost is probably the industry or market sector your customers are in.

The sources below list various figures for the cost of retaining a customer vs acquiring a new customer. The ‘cost’ in the sources listed here ranges from 3 to 30 times.

“It is generally recognised that acquiring new customers costs between 4-to-6 times more.” This article includes a lifetime value calculation formula.

“It’s often cheaper to market to existing customers as it can cost between 5 and 8 times more to attract a new customer than it does to keep an existing one.”

“65% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.” Source quoted as Gartner.

“We know that it costs more to acquire a new customer (roughly seven times) than it does to sell to an existing customer, so it makes sense to spend much more of your marketing effort with people who know you rather than with absolute strangers.”

“It’s generally accepted that it costs three times more to find a new customer than it does to sell to an existing customer.”

“Conventional business wisdom contends that it costs 10 times as much to obtain a new customer as it does to retain an existing customer.” Pricing for Profitability: Activity-Based Pricing for Competitive Advantage By John L. Daly (2002), p85. Published by John Wiley and Sons. ISBN 0471221597

“The commonly quoted ‘average’ being “it costs 7 times more to sell to a new customer than to an existing customer.”

“Attracting a new customer can cost as much as 15 times more than retaining an existing customer.” Winning New Business in Construction By Terry Gillen (2005), p89. Published by Gower Publishing Ltd. ISBN 0566086158

“Statistically speaking, the cost of acquiring a new customer costs five to ten times more than retaining an existing one. Not only that, but repeat customers spend, on average, 67% more.”

“The lifetime value of a customer includes everything they will ever buy from you today, tomorrow, and in the years ahead—and the cost of acquiring a new customer is estimated to be 20 times greater than keeping an existing customer happy.”

"Research shows that it can cost up to 30 times as much to get a new customer as it does to keep an existing one. It pays to stay very close to your customers, so you know their exact needs, today and tomorrow. Your aim is to be irreplaceable as their supplier." Mike Johnston The Chartered Institute of Marketing

“Acquiring a customer costs 5 to 10 times more than retaining one (eMarketer, 2002)

A 5 percent increase in retention yields profit increases of 25% to 95% (Bain and Company, 1990)

20% of your customers bring you 80% of your revenue (the old 80/20 rule which still holds)”

“Most businesses put all their marketing effort into getting new customers, yet it costs between seven and twenty times more to sell to a new customer than it does to sell to an existing customer.”

So, how & what are you doing to retain your existing clients & customers?

Do you have a system in place that will make your existing clients & customers, raving referral fans of your business?

Are you searching for a system that will make your clients & customers raving fans of your business & a constant source of referrals for your business?

Check out what we use to generate more referrals or contact the writer!

Acknowledgement: The UK Chartered Institute of Marketing 2010

Carolina G.

På jobb for å gjøre bærekraftig business & grønn vekst enkelt, smidig og lønnsomt for små/mellomstore virksomheter ✅🤑🎉 Grip grønne muligheter og skap konkurransekraft i det grønne skiftet med Mandag Igjen og meg 🏆🚀

6y
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Chrishelle David

Independent Communications Specialist and Freelance Content Creator

6y

Hi, why are there some of these statistics or quotes without any sources/accreditation as to the original source these numbers are from? Would you be able to shed some light Ian Kingwill? For example where are the following from: "“It is generally recognised that acquiring new customers costs between 4-to-6 times more.” This article includes a lifetime value calculation formula." - which article is this referring to? and " “The lifetime value of a customer includes everything they will ever buy from you today, tomorrow, and in the years ahead—and the cost of acquiring a new customer is estimated to be 20 times greater than keeping an existing customer happy.” " and this one - " “Statistically speaking, the cost of acquiring a new customer costs five to ten times more than retaining an existing one. Not only that, but repeat customers spend, on average, 67% more.” "

Nitin Negi

Sr. Business Consultant | Telstra Hackathon 2022 Winner | Post Graduate Program in Data Science and Business Analytics

6y

great consolidation of artefacts..latest artefacts would have been much appreciated

Joseph Harvey

Sales Executive at deckpro pumps | Providing fast, effective solutions to pump-related challenges

7y

Very interesting stats, and the gist of it..........do we appreciate our customers or do we assume that they will remain with us for ever regardless of how much or little attention we give them. Existing customers are a gift to be respected and nurtured. The results will follow!

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