Did you know that it costs five times as much to attract a new customer than to keep an existing one? The first rule of any business is to retain customers and build a loyal relationship with them and thereby avoid acquisition costs.
It’s a well-established fact that 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention. Also, it’s true that only 40% of companies and 30% of agencies have an equal focus on acquisition and retention.
Check out below infographic, ‘Customer Acquisition Vs. Retention Costs – Statistics And Trends’ for more such interesting and relevant facts.
Channels That Are Used The Most For Acquisition.
|Social media sites||72%|
|Price comparison websites||18%|
While more than 89% of companies see customer experience as a key factor in driving customer loyalty and retention, 76% of companies see CLV as an important concept for their organization.
Only 42% of companies are able to measure Customer Lifetime Value (CLV) accurately.
The probability of selling to an existing customer is 60 – 70%, while the probability of selling to a new prospect is 5-20%.
Existing customers are 50% more likely to try new products and spend 31% more when compared to new customers.
How Marketers Are Using Online Channels For Retention Or Acquisition?
|Online Marketing Channel||Acquisition||Retention||Both Equally|
|Online display advertising||85%||4%||11%|
|SEO (natural search)||66%||6%||28%|
|Mobile and web push notification||34%||39%||27%|
|Social media marketing||31%||28%||41%|
Most Effective Digital Marketing Tactics For Retention.
|Social media marketing||37%|
|Search engine optimization||13%|
|Digital video advertising||7%|
Increasing customer retention rates by 5% increases profits by 25% to 95%.
More than two-thirds (70%) of respondents agreed that it’s cheaper to retain than acquire a customer.
Acquisition versus Retention Formulae (Annual).
- CAR (Customer Attrition Rate) = ( Number of Customers that Leave Each Year ) / ( Total Number of Customers ).
- CRR (Customer Retention Rate) = ( Total Number of Customers – Number of Customers that Leave Each Year ) / ( Total Number of Customers ).
- Customer Lifetime Value (CLV) = (Total Profits) / ( Customer Attrition Rate ).
- Customer Acquisition Cost (CAC) = ( Total Marketing and Sales Budget Including Salaries ) / (Number of Customers Acquired).
- Cost of Attrition = (Customer Lifetime Value) * (Number of Annual Customers Lost).