Without customers you have no business!
They are the lifeblood of your business!
I know you know this but, it really cannot be emphasized enough.
So that begs the question as to where should you spend the most time and resources?
Customer acquisition or customer retention?
Let’s discuss. Are you ready? Buckle up it’s going to be a fun ride.
Customer Acquisition and Retention
Customer acquisition is essential to your business, I don’t need to tell you that.
It costs 5 times as much to acquire a new customer, than it does to keep an existing one. (Source: Invespcro)
Think about that for a second?
That’s a lot of money and time you spend trying to get one new customer. Don’t forget you need to figure out your customer acquisition cost and whether it makes sense at that time to pursue trying to get new customers.
I went through an example on how to best figure out your customer acquisition cost in another post.
I am not saying that customer acquisition should not be a priority for your business, rather there may be times where it makes sense to focus on customer retention instead.
44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention. (Source: Invespcro)
That’s an amazing statistic considering what we know about how much more time and money is needed to acquire a new customer.
Do you fall in this category?
Do you have a greater focus on customer acquisition vs. customer retention?
New customers are important for your business to grow, but if you focus that much time and resources to customer acquisition it may have the opposite effect.
What do I mean by that?
It means you’re at risk for neglecting your existing customers who are in fact already satisfied with your product/service as it’s meeting their needs and will keep buying from you.
If you ignore your existing customers and do not show them some love they will leave and go to your competitor.
You wouldn’t want that to happen now would you? Of course not.
So, it’s important to show your existing customers that you care about them at the same time you’re trying to get new customers.
Because if you don’t instead of adding to your existing customer base, therefore making it larger, you’ll be trying to plug a hole in a leaky bucket.
Which is counterproductive and will lose you money!
Are you in business to lose money? I don’t think so. So keep this in mind and don’t lose track of your existing customers.
Make sense? Are you picking up what I am putting down? Good.
What digital channels are used most for customer acquisition?
Here are some statistics explaining as such. (Source: Invespcro)
- website – 89%
- email – 81%
- social media – 72%
- direct mail – 66%
- SEO/PPC – 65%
- web banners – 60%
- mobile devices – 34%
- aggregator websites – 32%
- price comparison websites – 18%
As you can see a website is number #1 with 89%
I would agree with that 110% in that a website or blog is the most common used channel for customer acquisition.
In my opinion it is the most effective marketing tool for lead generation and new customer acquisition. I touched on this within a different blog post earlier.
Customer retention and customer relationship management software
Customer retention is as critical to the long-term success of your business as is customer acquisition.
So why do companies spend less time on customer retention that customer acquisition as evidenced by the statistic shared above?
Your guess is as good as mine fellow small business owner.
Furthermore, it is 1,000 times easier to sell additional products/services to a customer that is already buying from you, than it is to someone who is not.
Wouldn’t you agree?
Also, it is a way for you to double your revenue. Wait. What did you just say? Double your revenue?
Yes, I did.
Increase your revenue per existing customer by selling them additional products and services?
Not to mention you’ll save time and money because if you remember it costs 5 times more to acquire a new customer as opposed to keeping an existing one.
What are your thoughts?
Doesn’t it make sense to spend more time selling to your existing customers, rather than banging your head against the wall trying to get new ones?
Seems like a no-brainer if you ask me.
So how much time would I spend on customer retention?
I would spend 50% of your time on customer retention and 50% of your time on customer acquisition.
This way you have balance and give yourself the best chance to consistently grow your business.
Here are the most effective digital marketing channels for customer retention. (Invespcro)
- email marketing – 56%
- social media marketing – 37%
- content marketing – 32%
- referral marketing – 26%
- SEO – 13%
- display advertising – 12%
- mobile advertising – 8%
- digital video advertising – 7%
- affiliate marketing – 6%
- paid search – 4%
To help with your customer retention efforts I would use customer relationship management software.
- It keeps all of the information in place.
- Each person in your business has access to it.
- It allows for you to keep detailed information on each customer including but not limited when and what products/services they have purchased from you.
- Customer relationship management software keeps track of how many customers you currently have.
- Additionally you can use customer relationship management software to track a lead all the way to a customer as well.
So what customer relationship management software should you use?
There are a number of options available to you in which we will discuss in an upcoming blog post.
So stay tuned for that.
We have discussed customer retention and acquisition for your small business. While I would agree that your better short-term return-on-investment is customer retention you still need to keep your eye on the ball for the future.
Customer acquisition is your future and you’re best served if you have a process in place for customer acquisition.
What is the backlash of no process for customer acquisition and retention?
You slowly decline in revenue and you will eventually go out of business.
Do you have a customer acquisition and retention process in place?
Is that process working?
If that process is working, would you like to improve it?
Either way let’s connect and see how I can help you and your business in this area.