Why Keeping a Customer is Better Than Gaining a New One

It’s long been known in the business world that keeping a current customer is better than gaining a new one. However, many companies seem to forget this piece of wisdom; they allocate far more funds to advertising and wooing potential customers than to keeping their current clients happy. Obtaining a new client is exciting, and often mixed into the equation of how fast a company grows. But in the long run, working to make current customers happy is far more beneficial than spending resources on potential clients.

It’s cheaper in the long run, and will make you more profits.

It’s a lot easier to sell to a current customer than a new one. It costs 4-6 times more to acquire a new customer than to keep an old customer happy. Marketing Metrics found that there is a probability of 5-20% that a potential customer will buy. Compare that to the 60-70% probability that a current client will purchase another product. In fact, 65% of a company’s business is made up of current customers. For ecommerce businesses, first-time customers spend an average of $24.50, but returning customers spend an average of $52.20. Current customers are not only more likely to buy new products from you, but they also spend more on your products than new customers.

For businesses with a monthly or yearly subscription, retaining a customer’s business for a period of time may seem like it balances out by replacing them quicker than losing them. This kind of logic is faulty in a few different ways. It has been found that even a 5% increase in retention can raise the entire company’s profitability by 75%. Whereas the cost of finding potential customers, marketing to them, and convincing them to buy your product is far more than the cost of keeping a current customer happy.

The cost of losing a customer is steep, while the cost of keeping a customer is outweighed by the benefits.

Fostering customer loyalty can bring many benefits to your business: referrals, good reviews, and they are more likely to buy new products. The positives are high, and so are the negatives: a customer with a bad experience is far more likely to write a bad review, turning off other potential customers. An unhappy customer will tell an average of 15 people about their bad experience. This number goes up far more if the dissatisfied customer chooses to share their experience online: whether it’s on your social media accounts or on a separate reviewing website, hundreds of people can view just one bad review, making them question whether or not your business or product is the best for them. Damage control on any bad reviews is difficult, if not impossible, depending on where the customer posted the review.

It takes a lot less work to keep a customer happy than to find a new one.

The effort and resources it take to acquire new customers is high: you have to find that customer, set up a marketing strategy, put lots of money and time into that marketing strategy, and then hope that it works on a small percentage of your target audience.

What are some of the steps you can take to keep your current clients happy? Try a few of these out for size:

  • Focus more of your efforts and resources on customer service.
  • If the customer has an issue or complaint, respond to it immediately. This is also crucial if the customer is voicing the grievance on one of your social media accounts, because other customers or potential customers need to see that you are working on it right away.
  • When interacting with your customer online, let your own personality show through. You want to appear as human as you are in real life.
  • Reward your customers with a loyalty program or promotional discounts.
  • Create a separate, specialized email marketing campaign for your current customers.
  • Follow-up with customers after performing a service. If they were unhappy, find out how to solve the problem. If they were happy with your services, ask for a referral.

Even though business owners know that they need to work at retaining a customer just as hard as acquiring a new one, everybody needs a reminder. It really is simple to keep a customer happy: good customer service is key!

How do you work to keep your current customers happy? Tell us in the comments!


“Cost of customer acquisition vs customer retention.” http://www.camfoundation.com/PDF/Cost-of-customer-acquisition-vs-customer-retention.pdf. (7 Feb. 2014).

Shaw, Colin. “15 Statistics That Should Change The Business World – But Haven’t.” http://www.linkedin.com/today/post/article/20130604134550-284615-15-statistics-that-should-change-the-business-world-but-haven-t. (7 Feb. 2014).

“Customer acquisition.” http://tomfishburne.com/2013/11/acquisition.html. (7 Feb. 2014).

Dratch, Dana. “12 tips for taking care of your customers.” http://www.bankrate.com/brm/news/biz/Biz_ops/20020206a.asp. (7 Feb. 2014).