“It costs between 5 and 7 times more to acquire a new customer than to retain an existing one.” This quote belongs to a great marketing expert in the world, Philip Kotler. Analyzing it, it becomes clear how important it is to work on customer retention and to develop good strategies for this purpose.
But why is it more expensive to sell to a new consumer? Why is it interesting to prioritize loyalty? That’s what we’ll see here. Check it out!
The purchasing journey can be time-consuming and costly.
Before a customer completes an order with your company, they have to go through a whole journey: they must recognize a problem, evaluate the symptoms, look for solutions, clear up any doubts, choose the best offer and, finally, close the purchase.
This process must be designed and well planned by companies, requiring an investment that can be considerable.
To attract potential customers to a website, for example, it is necessary to invest in Digital Marketing — advertising campaigns, presence on social media, sending E-mail Marketing… These strategies present great results and should, indeed, be done!
However, what I am saying is that a customer who has made a purchase has already gone through this entire process and, therefore, new orders become easier and at a lower cost.
The company already has a relationship with the customer
Another point that shows the influence of customer retention on lower sales costs is that the company already has consumers’ contact details.
To convert a website visitor into a lead, you need to collect data, such as name and email. And this collection requires strategies that have a cost.
With customers, the data is already known and a relationship has been built. What needs to be done is to strengthen this bond, always thinking about generating the best possible experience for each one!
Customer retention increases repeat purchase referrals
For companies to be successful in sales, they need to invest in marketing campaigns. These will help increase brand awareness and achieve a leading position in the market.
However, when a consumer has great shopping experiences and their needs are met, they can start to act as a brand promoter, sharing their gains and attracting new consumers organically. They end up becoming a true fan of the brand!
The acquisition cost is higher than the maintenance cost
Finally, we must remember that there is a very important performance indicator when we talk about attracting new consumers: Customer Acquisition Cost (or CAC), which represents the amount needed to attract and convert a new customer.
It is essential to have knowledge of this indicator and maintain a good monitoring frequency to assess how your strategies are having an effect.
To calculate the CAC, you must add up all the investment made in an action and the number of new customers brought by it, dividing the first parameter by the second.
Or you can download our CAC Calculator Spreadsheet! With it, this calculation will be much easier.
Comparing acquisition to retention, selling to a new customer is more expensive than retaining an existing one. The relationship is already present, the data is already known and the actions are targeted.
Therefore, customer retention is very important in delivering good results for companies. But I am not saying that attraction actions should not be carried out, because it is not enough to attract and not be able to retain!
To do this, analyze experiences, conduct satisfaction surveys and always try to take actions to improve relationships and consumer perception of the brand. This way, the results will be very interesting and your company will gain greater recognition in the market!
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