In today’s market where many times “flat is the new growth” I often see an unwavering commitment to acquiring new business, new clients, new customers — sometimes servicing existing business and retention end up playing second fiddle.
It’s always a juggling act between retaining existing business and growing new yet in my experience growing businesses tend to spend too much of their time and money acquiring new customers and overlook their best source of growth – retaining and growing their existing customer base.
When was the last time you considered:
- Your customer churn vs. your industry norm? High is an obvious concern. Low? Good for you! How does your margin look?
- Your average customer, cradle-to-grave margin, vs. your cost per new customer acquired? Often customer acquisition cost is overlooked in customer profitability analysis (you do that right?). If your new customer growth is good and your bottom line isn’t improving as it should there’s a pretty good chance it’s time to review the effectiveness of your customer acquisition metrics, margin or both.
- Considered your revenue growth if you keep your existing average customer an additional month? Quarter? Year? Vs. the cost of improved customer service, improved product quality, reduced pricing, etc. to achieve?
- Revenue growth and importantly margin generated by acquiring new customers after the cost to acquire?
In my experience it’s almost always more effective retaining existing customers than acquiring new – so keep a keen eye on customer service and satisfaction.
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