New Customer Acquisition vs Customer Retention?

Every business owner wants new customers and often their sole focus is the acquisition of new customers. They spend the majority of their time looking for new customers and often neglect the fact that their existing customers could be buying from them more often.

Often business owners don't realize how big the cost is to attract a new client. This is because most people don't measure the process. This calculation is as simple as taking all the costs involved in attracting new customers and dividing it by the amount of new customers acquired in the same period.

The costs should include advertising, the business owner's or a sales person's time, a portion of the car lease, a portion of the office rent, computer costs, stationery costs, etc. - Yes, these must all be added in to get a true reflection. Do this calculation in your business and you will be shocked as to how expensive it actually is.

Now, the value of a business is largely determined by the customer base. If the customer base is dominated by A-grade customers with a great average lifetime value then this business will be much more valuable than say, a business with a customer base of one-off buyers.

So, if it's so much cheaper to sell to existing customers, shouldn't you be focusing the minority of your time on new customer acquisition and the majority of your time on keeping your existing customers coming back for more? After all, the focus on existing customers will make them raving fans who will talk about you anyway... Right there is a huge sales force.

I can hear it now... Some of you saying "but I sell a product or a service and there is no reason for the customer to come back." Well then find something! Look at software. You buy the software and it does the job, but then they come out with an upgrade. More bells and whistles that you probably don't need, but most people will buy just to have the latest version.

Look at other industries, how do they encourage repeat sales? Take the strategies and adapt them to your business...

Here's how to create a flood of new customers and cash into your business.