3 min readEnhancewell
It costs more to attract a new customer than to retain an existing one. So why do businesses spend so much time and money on acquisition while neglecting current customers?
Losing a customer is more than just a lost sale. It’s just the first piece in a domino effect that can impact your revenue, reputation, and overall business health. While the immediate financial loss is obvious, the hidden costs can be far more insidious. In today’s blog post, we’ll dig a little deeper to uncover the actual price of customer churn.
What are you really losing when you lose a customer?
When a customer walks away, you lose their untapped revenue, but that’s really just the tip of the iceberg.
An article by Forbes, quoting the book Marketing Metrics,stated that “businesses have a 60 to 70% chance of selling to an existing customer while the probability of selling to a new prospect is only 5% to 20%.”
Customer loyalty increases with time. Smile.io found that, after one purchase, there’s a 27% chance the customer will buy again. After two purchases, that number jumps to 49%. And after a third purchase, there’s a 62% chance of the customer returning for a fourth.
It’s never just the loss of a customer
When a customer leaves, it’s not just the immediate revenue that’s lost. You’ll need to invest in marketing and acquisition to recoup, and there’s the potential for significant reputation damage. Did the customer leave because they found a better deal elsewhere? Or did they leave because of a failure in service or quality? If it’s the latter, consider further revenue lost by unrealized word-of-mouth referrals, replaced by negative word-of-mouth, which can spread quickly, deterring potential customers and harming your brand image.
In today’s digital age, a single disgruntled customer can publicize their experience to a broad audience via social media, leading to a loss of trust and credibility. If you thought it was hard to attract clients before, it will get a lot more complicated (and expensive).
How to keep your customers (so you don’t need to spend $$ on replacements)
Start a customer loyalty program
Loyalty programs aren’t just for fro-yo chains and your local dry cleaner. Create a program that rewards repeat customers with benefits.
Offer discounts after purchase
How often have you used a new customer coupon? It’s a great way to attract a client for that first sale. Consider rewarding customers for return business, too. Include a discount code for their next purchase in your thank you email (you are sending thank you emails, right?!).
Make social media work for you
While a negative social interaction can be bad for business, a positive one can provide free marketing. Encourage happy customers to share their experience online by making it easy, with attractive packaging and a branded thank you card with social handles.
Call in the pros
Need more help growing your business while leveraging your current customer base? The Enhancewell Consulting team is your answer to scale and growth by enhancing your relationship with existing clients and gaining new ones without breaking the bank. Get in touch today for a free consulting discovery call, and find out how we can help you grow!