Question

Topic: Research/Metrics

Uk Costs Of Aquisition Vs Retention

Posted by Anonymous on 1/16/2004 at 4:06 AM ET 75 Points
Does anyone know of a good source of comparison studies for the costs of aquisition compared to the costs of retention? I'm particularly interested in UK studies in the financial services sector.

Many thanks.
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RESPONSES

  • Posted by ReadCopy on 1/17/2004 at 6:17 AM Accepted
    I don''t know of any particular studies in this area, but they are fundamentally different beasts, and therefore difficult to campare.

    In my opinion the most critical thing you should be concentrating on is retention, then growthin existing customers, then new acquisition.

    RETENTION STRATEGY:
    If you know your customer to be profitable then you should be trying to retain them, using the usual reassurance pieces, regular communications and hospitality (if appropriate).

    WALLET GROWTH STRATEGY:
    In addition, simple analysis on your existing customers, should be able to uncover a) how much they have to spend on financial services and b) how much of this "wallet" they spend with you. From this simple analysis you should be able to determine if you are able to get more from them, more of their "wallet".

    I would suggest that customers that spend >80% with you is saturation point and you can''t get much more out of them, whereas customers who spend <15% need to be grown. Customers inbetween also need to be grown for more of their wallet spend, but you may need to do more analysis on why they are only spending a reletively small amount with you.

    ACQUISITION STRATEGY:
    If from the above, you still will not generate the required sales, then you will need to look at acquisition obviously.

    Good luck
  • Posted on 1/19/2004 at 9:48 AM Accepted
    I''d think you''''ll find good benchmark data from the Royal Mail here:
    https://www.dm-online.co.uk/whyusedm.asp
    (they say it''s 5 times more expensive to acquire than to retain customers)

    If you have a budget, then this may help:
    < https://www.researchandmarkets.com/reportinfo.asp?cat_id=10&report_id=1757 >
  • Posted by ReadCopy on 1/19/2004 at 1:08 PM Accepted
    We all know acquisition is more expensive that, all you need to do is prove ROI!

    Sounds easy I know, but a pain to actually do :-)
  • Posted by Blaine Wilkerson on 1/19/2004 at 11:28 PM Accepted
    Try www.GoToast.com

    They may be able to help.

    Good Luck!
  • Posted on 1/21/2004 at 4:06 AM Member
    Bilaal

    I think the original research was carried out in the 1980s by TARP in the USA. The figure always quoted are that it costs 5 times more to sell to a new customer than to an existing one. Another one not so often quoted is that it costs 20 times more to sell to a lost customer than to an active one. Food for thought. But take the figures with a big pinch of salt.

    Your aim should be to know enough about your prospects/customers to be able to decide where to spend your marketing Pounds most effectively. If you can earn a higher return on moving a customer from a low profit band to a higher one than from acquiring a new customer, then you should do that. You may be suprised by what you find when you get to understand your prospects/customers better.

    If you are looking for information within the Financial Services sector, try the reports published by the Council on Financial Competition. I have always found them very pragmatic and insightful. If you work for a Financial Services company, you will probably find they already have corporate membership which entitles them to any number of reports at no extra cost.

    Graham Hill
    Independent CRM Consultant
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