Every time I walk into a fast food restaurant, whether it be for a cup of coffee, a salad, or a box of donuts to bring to someone’s house, I always pay particular attention to the server to see just how hard they will try to upsell, or cross sell, a bigger, better, tastier, or hotter food than what I placed an order for.
Why is that? Because I can learn from these large nationwide chains new and innovative ways to ask the very simple question of, “What else can I sell you today that will make myself and the company that I am employed with more money?”
How important is this? Well, for many agencies out there, the emphasis has long been on obtaining new business, and not as focused on protecting what is already in house. I speak with agencies on a daily basis. Based on these sources, I have gathered a few statistics.
1) Most experts agree that it costs 4 to 6 times more to acquire a new customer, than to retain an existing one
2) Marketing to existing customers is 5 to 8 times less expensive than marketing to new ones
3) 65% of a company’s new business comes from existing customers
4) Repeat customers spend on average 67% more than new ones
Because it costs so much more to acquire a new customer than it does to sell to an existing customer, you are much better off spending your marketing dollars on those who you know, rather than on complete strangers. Armed with these and other facts, I am not at all saying that you should not continue to obtain new business, but it makes perfect sense for an agency to find new and innovative ways to increase their effort on retaining existing business, and increase the portfolio of their current clients…something that many agencies don’t take advantage of.