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A Customer in the Hand is Worth Two in the Pipeline

by Hot Calls Inc. | Nov 01, 2013

Actually, your customers are worth much more than that. Did you know that it costs you 6 to 7 times more to win a new customer than to retain an existing one? That’s right – the cost of customer acquisition versus customer retention can reach as high as 700%.

 According to a report by Frederick Reichheld of Bain & Company:

  • Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer
  • Over a 5 year period customer attrition rates could reach as high as 50% if databases are left dormant
  • Businesses which boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.

And yet, we’ve found that many Fortune 1000 companies focus solely on the bottom line in staffing their customer support call center. The result is often mediocre service leading to disloyal customers – who in today’s digital world have no qualms about sharing their dissatisfaction on social media.

The expense of finding new customers
At the same time, these companies spend a huge chunk of their marketing budget on customer acquisition efforts. And for some reason they don’t connect the dots to see that by providing a positive customer service experience, they’d retain customers and reduce the need for customer acquisition spending.

Keep them happy and they will stay
Companies that focus on improving their customer service delivery experience see many quantitative benefits: reduced price sensitivity and fewer customer defections to competitors, as well as increased referrals and repeat purchases.

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