The Cost of Acquiring a New Customer
A business can be tough to get off the ground. Finding the right products and marketing plans are what’s going to make your new venture sink or swim. But, you also have to find the right customers. A constant struggle for many is whether to try and retain existing customers or go out and find new ones.
Studies vary on the ultimate costs of acquiring new customers compared to keeping existing ones, but almost all agree that trying to get new ones is the pricier alternative, often five times the investment or more. For many businesses, the cost of trying to acquire new customers is a major reason why they ultimately fail. They spend too much time and effort trying to find new clientele when they could instead focus on retention. Even keeping just a small amount (5 percent) of customers can boost sales by well over 25 percent, up to even 95 percent, according to research done by Frederick Reichheld of Bain & Company.
However, sometimes it’s necessary to go and find new business. A challenge that goes hand-in-hand with the cost of getting new customers is trying to monetize the ones you just acquired. It’s common sense that the value gained from the new customer has to be more than the original cost to acquire in order for a business to be profitable. It’s also important to keep track of of those costs and try to look into them at least twice a year. As the saying goes, “You can’t manage what you can’t measure.”
In order to cut down costs for getting new clients, some companies offer services to streamline the process — saving your business time. Some companies even offer a way to get customers tailored to your needs without even signing a contract. Additionally, businesses could look into a PR firm or similar-type company to help write articles for websites and trade publications.
While studies show that keeping existing clients is almost always going to be the cheaper option, sometimes finding new customers is unavoidable. If you own a business, be sure to keep costs in check and streamline the process as much as you can to save time. Time is money, and there’s always something else to do!