Through a series of articles, we will establish the state of customer service, to help you improve your customer service and turn it into a profit center. If you want to deliver a more intelligent customer service, there are 3 major points you have to consider:

  • The effects of customer service on your bottom line
  • The importance of customer acquisition VS. customer retention
  • How to leverage technology to deliver superior customer service

In the last article, we talked about the effects of customer service on your bottom line. Today, we are going to focus on customer acquisition versus customer retention; which one to prioritize and in which situation to increase your profitability.

Focusing more on customer acquisition or customer retention, that is the question. But what if you can grow with best of both worlds?

In our article last week, we saw the effects of customer service on your bottom line. Now we are going to understand what is best focusing on between customer retention and customer acquisition. It is not always easy to know which one to bet on, but we’ll try to lighten you a little.

Let’s start with Customer Retention

Customer retention can bring you 3 benefits not negligible:

1. Lower Cost

lower cost with customer retention

This is a lot easier and cheaper to keep an existing customer. Once you have established a relationship with an existing customer, they are going to require less from you. Acquiring new customers bring other costs: marketing, promotion, retail, equipment…

2. Higher customer spending

higher customer spending with customer retention

The longer you retain a customer, the more chances you have to repeat business.
– 50% of the existing customers may try other products that you offer – 31% are going to spend more money.
That is why customer retention is important

3. Better Profitability

better profitability with customer retention

This is the direct impact of keeping existing customers, as they can buy other products.

Now, on the other hand, we have Customer Acquisition

You can not only focus on retention of course because you need to acquire new customers in some way in order to grow. To do so, you need to find a strategy that includes both. The goal is to have some customer acquisition and to maximize retention.

customer acquisition

So here is our advice:

GROW WITH BEST OF BOTH WORLDS
  • Actively promote referrals with your most satisfied and profitable customers
  • Target your customer among those with the right profile: Do not encourage the acquisition and retention of unprofitable customers
  • Encourage client longevity: Do not jeopardize the loyalty of longstanding customer relationships by disqualifying them from better offers

 

That’s it for today, but if you wanna know more about acquisition vs retention or other customer service practices, don’t hesitate to download our ebook on the right, or here.

In the next article, we’ll see how to leverage technology to deliver a superior customer service!