It costs anywhere from $10 (retail) to $395 (technology/software) to gain a new customer (CAC = Cost of Customer Acquisition).
How do you get to your number? One approach is by adding together the following:
- Marketing Campaign costs (SEO, SEM, Social Media, Sponsorships, Print Ads, Video, Content Marketing, Sales Literature, Research, Trade Shows, )
- Wages associated with the Marketing Dept.
- Ad Agency fees, if you use one, and any other outside consulting services
- Costs associated with Marketing Platforms
- Sales: leadership, team, support, technology, travel & expenses, etc.
- Healthcare, overhead,
Then divide it by the Total # of Customers Acquired.
Why is this important? Most associations and companies are under pressure to grow their businesses. Growth can only occur in sync with a reliably strong customer-base. Think about it, why are companies allowing for customer attrition? This should be a % you are focused on minimalizing instead of accepting.
Consider all the companies acquired for previously unthinkable numbers, not for their profitability but for their customers. The Network Effect is driving more decisions in the digital age than most other factors.
I’ve read estimates that it costs anywhere from 6-7x the amount needed to keep a customer to obtain a new one. By knowing, I mean KNOWING, what your customers think about your products and services has never been more critical. Competition and continual changes impacting markets require you to be as close as possible to them almost like a parent and a young child.
Thus, CX (Customer Experience) platforms are critical. If you have a membership, paid subscribers, regular transactions, attendees, and other ongoing client relationships, CX must be a measurement for your business’ KPIs (Key Performance Indicators). It has to be part of your company culture.
Reasons not to?
“I already have regular contact with my customers; I don’t need to survey them.”
“We sell through distributors, so there isn’t a need to know what the end-user is thinking.”
“We aren’t that big, so we use one of the free tools a couple of times a year?”
“We are innovators. We are ahead of our customers.”
If these are your reasons, then please raise your hand. There are lots of companies obsessed with CX that would love to serve your customers. You are now vulnerable.
How important is it to know what your customer is thinking? It is the most cost-effective, reliable means to stabilizing and growing your client base. It enables you to stay ahead of competitors as your customers advise you as you evolve.
Let’s start a dialogue on this. It is that important.