Many brands place far more emphasis on new customer acquisition than on customer retention.
Yet it costs five times more to attract a new customer than to retain an existing customer. According to Bain, a 5% increase in customer retention can increase a company’s profitability by 75%.
I’ve been thinking about this dynamic while dropping Comcast after a series of bad experiences. Comcast is the largest cable and Internet provider in the US. They are also consistently ranked at or near the bottom for customer support.
Their poor investment in customer service hasn’t prevented them from investing in expensive Comcast marketing collateral to send me, even as they fail to resolve their poor service and keep me as a customer.
Cable companies may be extreme examples, but I think that many brands are like Comcast. They treat customer retention is an afterthought and take existing customers for granted.
Sooner or later, brands that excel at customer retention will win in a social media world.
(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. Thanks!)