Is customer retention hitting your company’s bottom line?
Key points
Customer acquisition costs can be significant, especially if those customers don’t stay around.Look for ways to measure and increase your customer retention numbers, whether by community building or seeking feedback.You might also focus on the types of customers that are likely to make the most difference to your bottom line.
When you’re running a small business, it can be a struggle to keep the plates spinning. Whether it’s developing your product, building your brand, hiring staff, or acquiring customers, there are many urgent tasks that can swallow your time. As a result, sometimes the important but less urgent priorities fall through the cracks.
For example, you may spend lots of energy attracting new clients but a lot less on keeping them. According to Kevin O’Leary, this is a big mistake. “Customer acquisition cost is the silent killer for so many small businesses,” he tweeted recently. “If you’re constantly burning money trying to capture new customers, you’re going to lose.”
Why Kevin O’Leary thinks customer acquisition costs could kill your business
According to research and advisory firm Forrester, it costs five times more to acquire a new customer than it does to keep an existing one. But we don’t really need stats or research to tell us that. The logic speaks for itself. Spending large chunks of your budget on attracting new customers is only worthwhile if you can keep them.
I run a small newspaper, and almost 70% of our advertising income comes from repeat business. While it does take time to maintain those relationships, it is nothing compared to the time and effort I put into onboarding each new ad buyer or searching out new ones. Every business is different. But if you think about the energy you put into your existing relationships, it’s almost certainly considerably less than what you spend on attracting and onboarding new customers.
Not only is it…
..
[ad_2]