Where do you come out on the retention vs. acquisition question? What I mean is do you think it’s more of an imperative to keep your current customers happy (retention) or to keep filling the revenue pipeline with new customers (acquisition)? A study from the Forbes Insights folks says that:
42% of respondents said that expanding their customer base was an important strategic priority for their company. And, nearly one-third of executives worldwide said that retaining their existing customer base was a priority.
This is from a study called “Mastering Revenue Lifecycle Management: Customer Engagement Leads to Competitive Advantage,” which talks about a systemic approach to maximizing revenue throughout the lifetime of the customer relationship. On the surface, this struck me as strange since I’ve always felt it was more cost effective and easier to keep an existing customer than to acquire a new one. The Ipsos folks say that I’m off base – the whole “it costs 5x more to find a new customer” is a myth.
Maybe it has to do with how “old” a company is. The study found that more than 70 percent of respondents from mature companies believe that enhancing customer loyalty is their organization’s primary goal, as opposed 39 percent of less mature companies. That would make sense since one would expect that the longer a company has been in business, the larger a customer base it has.
Maybe I’m just partial to the “fewer but deeper” relationships thinking, but I fall into the retention school with respect to priorities. Let me repeat the question with which we began: where do you come out on the retention vs. acquisition question?