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How much more expensive is it to acquire a new customer?

David wants to minimize his marketing costs. He decides to institute a loyalty program rather than focus on finding new customers. He knows that it costs times more to acquire a new customer than to keep an existing one.

5 times

Explanation:

Marketing is a very important aspect of any business as it is one of the factors that dictates the sales/profit making of a product. Sales can be a existing or new customers or both as the aim of marketing is to get products sold.

Acquiring a new customer in any business usually or more often than not, requires five times the cos of keeping an existing customer. This is because an existing customer is more likely to buy a product compared toa new customer as there is little or no convincing to do. Just the suggestion of the product to an existing customer is sometimes enough for he/she to purchase.

When customer retention is increased by 5%, profits can go from 25% to as much as 95%. This leaves the success rate of selling to an existing customer at 60%-70% while for a new customer is 5%-25%.

Cheers.

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