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|Megan Rutherford has a diverse background in sales, marketing, and public relations. She has 15+ years of experience in helping small businesses grow their unique markets. Certified as an inbound marketer, Megan specializes in internet & email marketing, search engine optimization, social media, and more. Offline activities include direct mail marketing, public relations, and event planning.|
New Customers vs. Retaining Customers: What’s Best for your Business?
Wanting the best for your business is a common thing among most business owners and managers. When it comes to attracting new customers or retaining existing customers, it’s a tough call on what to focus time, money, and effort on. While customers are the most crucial part of any business, it takes a lot to gain and keep them.
Acquiring new customers seems to be a significant portion of where marketing dollars are spent, but is it really worth it? While each business thrives with gaining new customers, it shouldn’t come at the cost of losing existing customers. Most studies show that the cost to acquire a new customer is five times more than that of retaining an existing customer. Often spending money on directing potential customers to either a website or a brick-and-mortar location allows for only one shot to impress and retain them. Lead generation can take on a variety of forms including website, online ads, offline advertisements, and a number of other means. Increasing a customer base can be a great way to grow a business. Make sure that you have new customers wanting to come back for more!
Existing customers have already spent time and money with your business so offering extra incentives such as discounts, and other items of value can help in not only staying in touch but bringing them in for more potential business. Increasing customer retention can also help the bottom line, as selling to an existing customer has a higher success rate than that of selling to a new customer. Additionally, existing customers are more likely to refer and make additional purchases in the future.
Nurturing existing customers can be useful for the bottom line. But without having enough existing customers to make a business thrive, it may be a necessity to attract new ones as well. Determining what keeps customers coming back is crucial; hopefully, it’s the level of service and value they feel that they receive.
The Customer Lifetime Value
If you’re not sure what area to focus in- either customer acquisition or customer retention, coming up with a balance in between might be the best way to go. Consider calculating the lifetime value of a customer to understand better where your efforts should be focused on.
The Bottom Line
Customer acquisition and retention statistics don’t lie, and the vast majority point to the fact that keeping existing customers is cheaper than attracting new customers. Marketing dollars spent chasing down new customers aren’t always well spent due to the lower conversion rate. While staying in touch with existing customers to keep top of mind, can pay off in repeat business.
A variety of marketing techniques can be utilized for both customer acquisition and customer retention. Email marketing, content marketing, and social media marketing are all great ways to not only stay in touch with existing customers but also attract new ones.
Even in the digital world, a personal touch can go a long way. Human interaction can be an excellent way to connect and get to know customers better. The experience is what counts; having a full array of tools to help not only gain but also retain customers is crucial. As a small business, you need to understand what costs more for your business and your what’s best for the bottom line.