It’s five times cheaper to keep a client than to get a new one. ~ U.S. Office of Consumer Affairs
Many statistics and studies exist that prove great service pays for those businesses who place a priority on delivering great service. Intuitively most people know good service is good business. Did you ever stop to really think about why some of these statistics are true, however?
For example when it comes to the statistic about it being cheaper to keep a client than get a new client, why would it be five times cheaper to keep a client than get a new one? Here are some thoughts. See which ideas pertain to you and your company:
- There are often a lot of up-front costs with attracting new clients: marketing, time, sales, advertising, paperwork.
- Discounts are often given to new clients to attract them.
- New clients tend to need more hand-holding. They don’t understand the product and/or service and ask more questions.
- New clients tend to make mistakes. Mistakes that can cost the relationship and/or money to fix.
- New clients don’t tend to do as much business with you. You need to gain their trust first.
- Clients who have been with you a while will often give you referrals. Their referral is someone who has been pre-sold on your services by a friend, putting them further on the client life cycle.
Now my question is this: If this is true, why do we spend so much on attracting clients, and next to nothing on retaining them?