This white paper delves into the customer life cycle and addresses the dilemma about where enterprises should put their focus - on customer acquisition or customer retention? It also highlights how this dilemma impacts the CIO and innovation, as well as some of the outcomes for business and customers.
Problem Statement: The old debate stands: should companies focus on customer acquisition over retention? Despite the fact that the cost of bringing in new customers is much higher than the cost to keep existing customers, companies place a disproportionate focus on marketing and advertising in order to attract new customers. In doing so, they create what’s called “the leaky bucket syndrome,” i.e., as fast as companies are bringing new customers in the front door, existing customers are running out the back door. Should companies plug the leak or keep filling the bucket?
The debate about where brands should focus their energies and currencies is strong. Despite the statistic that acquiring new customers costs 5-25 times as much as retaining existing ones, marketers (and, generally, their CEOs, as well) believe that resources should be spent on acquiring new customers. Why? Keep reading to find out.
In the meantime, there’s just one question: How many of those new customers did they actually retain?
And as a follow-up to that question comes: How many of those new customers purchased again? How many of those new customers recommended the brand to friends and family? How many of those new customers are still with the company, a year later? Was the customer experience such that customers will come back for more of what they’re selling?