There is nothing more thrilling to sales professionals than landing a shiny new account. As we engage new customers, our ideas are fresh, our perspective is new, and our solutions are heroic; but statistics show that time spent engaging existing customers will do far more for our bottom line than time dedicated to pursuing new accounts.
Simply stated, keeping customers drives profitability. Existing customers cost less to reach, cost less to sell, are less vulnerable to competitive disruption and will buy more over the long haul. Longer-term customers provide more referrals, tend to be less cost-sensitive and are more efficient users of the products and services they buy. Not convinced? Consider these stats:
- The cost of new customer acquisition is 5-12 times greater than customer retention. The statistics vary greatly, with some estimates placing new customer acquisition as much as 30 times more costly than customer retention.
- Investment ROI is up to 10 times higher for customer retention than for acquisition of new customers.
- Eighty percent of your future profits will come from 20 percent of your existing customers.
- Increasing customer retention rates by 5% increases profits by 25-95%.
- The probability of converting an existing customer is 60-70%, compared with 5-20% for converting a new prospect.
Bottom line, the overall value of a customer increases the longer that customer remains a customer. Just as important, your overall value to the customer also increases over time. Longer term customer relationships are the ones in which you increase the depth and breadth of your connection throughout the client organization, and earn the opportunity to act as consultant and business advisor.