An interesting idea to think about

In business-to-business marketing, it costs approximately 10 times as much to acquire a single new customer as to keep an existing customer.

Many businesses lose about 25% of their customers to their competitors annually.

If you could cut 5% of that customer loss, you could add as much as 100% to your bottom line.

Let s say you allocate 6 times as much to advertising as you do for customer retention.

Suggested Formula

Acquisition Approach: you allocate $120 for advertising and acquire 6 new customers at $20 each and you spend $20 and retain 5 customers at $4 each.

Retention Approach: you allocated $60 of your advertising budget to acquire 3 customers and $80 towards customer retention for 20 customers. You could add as much as 100% to you bottom line.

Conclusion: higher revenue for the same expense, which translates to a higher revenue for the same cost.

How the numbers work!

Cost to acquire 1 new customer = $20 and to retain 1 customer = $4

Typical Customer Acquisition Formula

You acquire 6 new customer @ $120

You retain 5 customers @ $ 20

Same costs @ $ 140

Results 11 Customers

Customer Retention Formula

You you aquire 3 new customer @ $60

You retain 20 customers @ $80

Same Costs $140

Different Results 23 active customers