This is in-depth research about customer acquisition and retention costs.
In this research, you’re going to find:
- Which is cheaper: to attract a new customer or to keep an existing one?
- What do companies focus more on – attracting new consumers or retaining old ones?
- What is the key factor in driving customer loyalty and retention?
- And much more…
Let’s get right into it.
- Customer Acquisition vs. Retention Costs Summary
- 11 Customer Acquisition vs. Retention Statistics
- 1. What Is the Probability of Selling to a New vs Existing Customer?
- 2. What Are the Costs of Acquiring New Customers vs Retaining Old Ones?
- 3. How Customer Retention Affects Company Profits?
- 4. Customer Acquisition vs Retention: What Are Companies Focusing More on?
- 5. How Much Company’s Business Comes from Existing Customers?
- 6. What Is the Average Customer Retention Rate?
- 7. Existing Customers Generates More Sales Than New Ones
- 8. Only 40% of Companies and 30% of Agencies Have an Equal Focus on Acquisition and Retention
- 9. What Is the Main Factor in Driving Customer Loyalty And Retention?
- 10. What Is Buying Behavior of Existing Customers vs New Customers?
- 11. 82% of Companies Agree That Customer Retention Is Cheaper Than Acquisition
Customer Acquisition vs. Retention Costs Summary
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.
- It costs up to 7x more to acquire a new customer than to retain an old one.
- Increasing customer retention by 5% increases profits by 25-95%.
- 44% of companies have a greater focus on acquisition vs. 16% that focus on retention.
- 65% of a company’s business comes from existing customers.
- For most industries, the average customer retention rate is below 20%.
- Loyal customers spend 67% more than new ones.
- Only 40% of companies and 30% of agencies have an equal focus on acquisition and retention.
- 89% of see customer experience as a key factor in driving customer loyalty and retention.
- Existing customers are 50% more likely to try new products and spend 31% more than new customers.
- 82% of companies agree that customer retention is cheaper than acquisition
11 Customer Acquisition vs. Retention Statistics
1. What Is the Probability of Selling to a New vs Existing Customer?
The probability of selling to an existing customer is 3x to 35x higher than to a new one.
When you are trying to sell a product, you have a 60%-70% chance of making a sale with a returning customer. The probability of the same with a new customer is 5%-20%.
These numbers make perfect sense, and as we all know, people are more responsive to individuals or companies they’re already familiar with, compared to complete strangers.
2. What Are the Costs of Acquiring New Customers vs Retaining Old Ones?
It costs up to 7x more to acquire a new customer than to retain an old one.
Depending on the scope of your business and industry, you may spend 7x more to acquire a new client.
A returning client already trusts your brand and likes your products.
Therefore, you only need a little marketing effort to get them on board again.
It is easier to increase your ROI by nurturing your relationship with existing customers.
3. How Customer Retention Affects Company Profits?
Loyal customers generate more revenue each year they stay with a company. Statistics indicate that a 5% increase in customer retention increases profits by 25% – 95%.
Recurrent customers tend to buy more from a company over time.
This increases lifetime value.
Additionally, loyal customers refer others to your company, thus increasing your profit margins.
4. Customer Acquisition vs Retention: What Are Companies Focusing More on?
44% of companies focus on customer acquisition, while only 16% that focus on retention.
When looking at agency clients, the number is 58% vs. 12%.
However, 21% of company respondents believe they should be focused on the acquisition, while 22% think more focus should be on retention.
Even though most companies indicate that retention is better than acquisition, they are still doing the opposite.
The probability of selling to an existing customer is 60% to 70%. And the chances of selling to a new prospect is 5% to 20%.
5. How Much Company’s Business Comes from Existing Customers?
65% of a company’s business comes from existing customers.
Most businesses usually focus on getting new clients.
However, your existing customer base is far more critical when it comes to generating sales.
Customer Research Institute argues that the existing customer base contributes 65% of the company’s business.
Seeing as it is easier to make sales with returning customers, companies that focus on retaining their customers record up to 60% more profits than their competitors.
6. What Is the Average Customer Retention Rate?
For most industries, the average customer retention rate is below 20%.
Many companies across different industries struggle to retain their existing customer base.
The customer retention rate allows companies to know where they stand, how good they are at bringing in prospects, as well as satisfying their existing customers.
A research report by MixPanel’s Product Benchmark showed that the average retention rate was 20% across different industries.
This rate is below the average mark, which is 35% in the SaaS industry and 20% in the media and coverage industry.
7. Existing Customers Generates More Sales Than New Ones
Loyal customers spend 67% more than new ones.
Your existing customer base already accounts for most of your sales.
These returning customers are also more likely to spend more on your products than a new prospect.
A new customer will consider your company or business venture risky and will not commit to spending much.
A returning customer, on the other hand, gets to build a relationship with your brand.
This relationship culminates in trust, and customers are likely to spend 67% more than new customers.
8. Only 40% of Companies and 30% of Agencies Have an Equal Focus on Acquisition and Retention
Reports show that only 40% of companies and 30% of agencies currently had an equal focus on acquisition and retention.
When asked which are between the two should have more focus, 56% of the respondents believed in allocating equal efforts and resources on both.
Equally, focusing on both helps maintain consistent growth, financial planning, and building long-term relationships with clients.
Therefore, companies and agencies should strike a balance between the two.
9. What Is the Main Factor in Driving Customer Loyalty And Retention?
89% of companies see customer experience as an essential factor in driving customer loyalty and retention.
Most marketing teams in companies are responsible for creating buyer personas, collecting data, and engaging with prospects. An effective marketing strategy allows a company to deliver experiences that delight buyers throughout their customer journey.
Therefore, to maximize profits and increase sales while keeping operation costs low, companies should focus on customer experience management and supporting tools.
10. What Is Buying Behavior of Existing Customers vs New Customers?
When you introduce a new product in the market, your current customers are 50% more likely to try it out than new ones.
Existing customers also spend 31% more than new prospects.
11. 82% of Companies Agree That Customer Retention Is Cheaper Than Acquisition
Retention and acquisition are two of the essential strategies for generating sales.
Although most companies agree that it would be cheaper to retain existing customers, many of them are still focused on acquisition rather than retention.
Econsultancy carried out a Cross-Channel Marketing Study for two years.
Although there was a decrease in the number of companies that focussed on the acquisition, it remained the dominant strategy for most companies.
- Customer Loyalty By Jill Griffin – Altfeld Inc
- Don’t Spend 5 Times More Attracting New Customers, Nurture The Existing Ones – Forbes
- The Age of the Customer: Focus on Retention – DNB
- Here’s Why Customer Retention is So Important for ROI, Customer Loyalty, and Business Growth – HubSpot
- The Ultimate Guide to Customer Loyalty in 2017
- Marketers more focused on acquisition than retention – Econsultancy
- Companies more focused on acquisition than retention: stats – Econsultancy
- Exploring Customer Acquisition vs Retention Costs – Struto
- Millennials and Gen Zers Are Less Inclined to Participate in Loyalty Programs – eMarketer
- HelloWorld: New Loyalty Report Reveals 75% of Consumers Want To Be Rewarded Beyond Purchase – Globe News Wire
- Customer Retention Should Outweigh Customer Acquisition – Retention Science
- Gartner Surveys Confirm Customer Experience Is the New Battlefield – Gartner
- Poor Service Will Cost Companies $1.6 Trillion. How to Avoid Being a Service Statistic – SalesForce
- U.S. Companies Losing Customers As Consumers Demand More Human Interaction, Accenture Strategy Study Finds – Accenture
- The Hard Truth About Acquisition Costs (and How Your Customers Can Save You) – HubSpot