Customer retention is essential for business growth, however implementing a solid and effective customer retention strategy can be easier said than done. Figures published by CallMiner show that $136.8 billion is lost by U.S. companies each year due to avoidable customer switching. Customers now have a myriad of channels available to them, and due to fierce paid and organic competition online, combined with unpredictable customer behaviors, finding the most successful ways to retain customers and stop them from jumping ship is a focus for most marketers.

When calculated correctly, Customer Lifetime Value is possibly the most commercially valuable insight at the disposal of the marketing team. However, if calculated wrongly it can be a fast-track way to wreck marketing effectiveness and destroy a business!

An accurate view of Lifetime Value can be used as a primary measurement to predict an individual's potential value to the business and to track the success or failure at each step of the customer's journey in obtaining that potential value.

Customer retention is valuable in more ways than you might initially expect. In fact, the cost of retaining a customer is up to seven times less than acquiring a new one. Moreover, repeat customers spend on average 33% more than new customers!

So whilst many companies are borderline obsessed with spending increasing amounts of time and budget dedicated to the acquisition of new customers, retaining customers is where you should really be focusing your efforts. 

Marketers, you should stop acquiring new customers.

Yes, that’s right! It might sound counter-productive, but it’s true.

The facts tell us that it’s becoming increasingly important for marketers to focus less on customer acquisition and more on selling to existing customers. After all, attracting a new customer can cost five times as much as retaining an existing customer.

Gone are the days when a customer used to be loyal to a brand by default. The abundance of choice in today’s world, the increased competition from digital disruptors like Amazon and eBay, and the accessibility of reviews and third party recommendations all make building a customer loyalty strategy more difficult than ever.