Which Is Cheaper: Keeping Returning Customers or Winning Over New Ones?

First Financial Customer Service, Starting a Business 0 Comments

Are you a business or a start-up trying to save money? Want to learn a few ways to keep existing customers? Wondering if it is

A dissatisfied customer will tell between 9-15 people about their experienceWhite House Office of Consumer Affairs
cheaper or better to keep existing customers or win over new ones? If you answered yes to any of these questions, then this is a post that you want to pay attention to. We will tell you about the vast difference customer service can make in this arena, how to keep your current customers and get them to help you win new ones, and more.

Why Customer Service Is Critical To Profitability

Happy customers who get their issue resolved tell about 4-6 people about their experience.White House Office of Consumer Affairs
Providing great customer service is one of the simplest and most cost effective things a business can do to keep existing customers and win over new customers. Great customer service is truly not that difficult. Here are a few ways that you can provide fantastic customer service:

 

  • Make sure that contact information is clearly displayed in your webpage and/or product packaging;
  • Be sure to have several ways to allow customers to contact you. Email, phone, chat, and social media are all common examples;
  • Train your customer service representatives to solve problems quickly and deescalate any customers who may be angry.
customers leave because they were upset with the treatment they received whilst speaking to customer services – US Chamber of Commerce
68% - upset customers leaving

Retaining Customers and Getting Referrals

A 2% increase in customer retention has the same effect as decreasing costs by 10% Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy
Great customer service is most certainly one of the key ways to keep existing customers. This is because quality interaction with your company means that customers will keep coming back because they trust you, and hold your company in high regard.
It costs 6 – 7 times more to acquire a new customer than retain an existing oneBain & Company
But professional, highly-responsive customer service can also help you to get referrals for new customers. Do not underestimate the power of word-of-mouth. When your existing customers receive great customer service, they are likely to tell others. These testimonials are much more likely than any other form of advertising to get new customers because they come from a person (often a friend) that someone personally trusts.

Customer Service – Final Verdict 

So which is most cost effective? To keep existing customers or winning over new ones? To keep your current customers, all you have to do is provide quality goods and services, plus great customer service.Chances are you already have customer service that you could quickly, easily, and cheaply improve on. Winning over new customers requires media in the form of advertisements, email campaigns, website improvements, new product or service development, building your brand, and more. Clearly, winning over new customers is much more expensive.

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78% of consumers have ended a transaction due to bad service
The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%Marketing Metrics
For every customer complaint, there are 26 other unhappy customers who have remained silentLee Resource
Customer profitability tends to increase over the life of a retained customerLeading on the Edge of Chaos, Emmet Murphy & Mark Murphy

 

Additional Sources

Return on Behavior Magazine

Huffington Post

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