Many businesses tend to spend much of their time and money acquiring new customers.  In that process, they often overlook their best source of growth, which is not in attracting new customers but rather in retaining and growing their existing customer base.  When businesses are searching for ways to improve their bottom line they would do well to focus their energy on customer retention.  It costs a lot less to keep a customer or get a new customer by word-of-mouth than it is to win a new customer.  Case in point.  A business whose model is based on monthly recurring sales (such as the cell phone, cable or insurance industries) found that historically their customers stayed an average of two-and-a-half years.  Meanwhile, the customer acquisition cost for that business to just breakeven was nearly two years.  If that business were to retain all of its customers by just one additional month on average, it would achieve an additional 3% of annual growth.  If it retained its customer base for four additional months, it would create double-digit growth…. without adding a single customer.  Clearly, keeping a customer even a little longer would be much better for that business than landing a new customer.  That is true for most businesses. Continue reading →