Throughout my career, I’ve been blessed to have worked in multiple industries and great leaders. The tremendous knowledge and experience obtained over the years are profound and extremely valuable.
As a Sales Leader, I have found a common problem that exists in most, if not all, industries – New Customer Acquisition as their Main Focus. Many business owners and Sr. Leaders that I have interacted with seemed to obsess over the need to acquire new clients. Unfortunately, in my opinion, this obsession leads them to forget one of the most critical aspects of their business – Existing Clients (Customer Retention).
Although Customer Acquisition needs to be and should be an essential part of any business growth strategy, Customer Retention needs to be the main priority for company owners. Their business model and sales process should reflect this clearly, however, their actions speak louder than their words. L
The successful business leaders, which I have encountered throughout my career, understand this quite well, and they are very good at adequately balancing Customer Acquisition vs Retention.
Here are some facts to consider:
- The cost of acquiring a new customer is typically 5 – 7 times more expensive than to keep an existing client
- The profitability of a sale from an existing client is about 60-80%, whereas the profit from the sale by a new client is only 5 -20% (due to the acquisition costs)
- Existing clients are most likely to spend 30 – 35% more on new products or services you may offer in the future.
- On average, 20% of existing customers repeat their business, which means the remaining 80% are either dormant or have left you.
- 71% of customers that have decided to leave – say they left because of poor customer service.
- Out of those who leave you, approximately 61% go to the competition.
Now, with this new understanding, it begs the question: Why do so many companies spend most of their time, money and efforts trying to acquire new customers instead of focusing on improving their customer services programs, to effectively service and retain their existing clients?
Hmmm… food for thought!