Customer Acquisition vs Retention Cost – Statistics & Trend

Striking a balance between acquiring and retaining customers is crucial in business. The cost of acquiring a new customer can be 5-25 times more than the expense involved in retaining an existing one. 

Interestingly, it’s the existing customers who generate 65% of a company’s revenue, contributing significantly more than new customers, who bring in 35%. It is important to observe, with evolving business trends, how this dynamic plays a role in companies’ strategies and outcomes. 

In light of this, let me share the most crucial customer acquisition vs. retention cost statistics and trends you should be aware of right away. Also, some customer acquisition statistics and facts are important to note. 📊🔍💡

Customer Acquisition vs Retention Costs: The Key Data

• Acquiring a new customer can cost 5-25 times more than retaining an existing customer.
• Companies have a 60-70% chance of selling to an existing customer versus a 5-20% chance of selling to a new customer. 
• 44% of businesses prioritize customer acquisition, while only 18% prioritize customer retention.
• Existing customers are 50% more likely to try your new product and 31% more likely to spend more on their average order value than new customers.
• Existing customers generate 65% of a company’s revenue, while new customers generate 35%. 
• Increasing customer retention by 5% can result in a 25-95% increase in profits.
• AI can potentially lower client acquisition costs by up to 50%.
• According to new research, customer acquisition costs have increased by 222%.
• Brands are losing a record $29 for each new customer they acquire.
• The average customer acquisition cost for B2B companies is $536.

Sources: (HBR, Groove HQ, Linkedin, Trust Biz Journals, IBM, Simplicity DX, Business Wire, User Pilot.)

Retaining Customers Costs 5-25 Times Less Than New Acquisitions

Important takeaway:

Insight from Data	Rationale
Acquiring new customers is substantially more expensive.	The cost disparity of 5-25 times emphasizes the economic advantage of retention over acquisition.
Brands must prioritize customer loyalty strategies.	Given the significant cost differences, it’s imperative to focus on nurturing existing customer relationships.
Investment in retention can offer a more sustainable ROI.	The data underscores that, in many instances, resources channeled towards retaining customers may yield better long-term financial outcomes.

Source: HBR

Existing Customers Offer 60-70% Sales Potential vs. New at 5-20%

Important takeaway:

Insight from Data	Rationale
Existing customers significantly increase sales probabilities.	Companies face a 60-70% chance of successful sales with them, underscoring their value in the sales funnel.
New customer acquisition presents a lower sales conversion rate.	The stark contrast of only a 5-20% success rate highlights the challenges and uncertainties in targeting new clientele.
Prioritizing customer retention strategies is economically prudent.	The data suggests that nurturing and selling to existing customers can be more cost-effective and promising than seeking new ones.

Source: Groove HQ

44% of Firms Favor Acquisition Over Retention at 18%, Reveals Survey

Important takeaway:

Insight from Data	Rationale
A disproportionate number of businesses focus on acquisition.	With 44% of companies emphasizing new customer acquisition, it reveals a dominant trend in business strategy.
Customer retention is often undervalued in strategic priorities.	The mere 18% that prioritize customer retention showcases a potential oversight in recognizing its economic value.
A recalibration towards retention can offer more sustainable growth.	Given the inherent cost-effectiveness and higher sales probabilities with existing customers, businesses might benefit from a more balanced approach.

Source: Linkedin

Existing Clients 50% More Likely to Explore New Products; Spend 31% More

Important takeaway:

Insight from Data	Rationale
Existing customers exhibit a higher propensity for product exploration.	They are 50% more inclined to experiment with new offerings, showcasing their trust and interest in the brand.
Loyalty translates to greater spending power.	The notable 31% higher average order value among existing customers indicates their deeper financial commitment to the brand.
Investing in nurturing existing customers yields multifaceted dividends.	Their willingness to try new products and spend more underscores the importance of customer retention strategies in driving revenue.

Source: Trust Biz Journals

65% of Company Revenue Driven by Existing Customers; New Contribute 35%

Important takeaway:

Insight from Data	Rationale
Existing customers are a primary revenue source.	They account for a substantial 65% of a company’s revenue, emphasizing their integral role in business profitability.
New customers, though valuable, contribute less to revenue.	The 35% revenue from new clientele, while significant, pales in comparison to the earnings from loyal patrons.
Prioritizing customer retention is not just strategic but also financially imperative.	The distinct revenue split underscores the economic importance of nurturing and retaining current customers.

Source: Linkedin

Boosting Retention by 5% Can Skyrocket Profits Between 25-95%

Important takeaway:

Insight from Data	Rationale
A slight boost in customer retention yields substantial profit gains.	The potential profit surge of 25-95% from a mere 5% increase in retention highlights its financial potency.
Retention strategies offer exponential returns.	The data suggests that efforts put into retaining customers can lead to disproportionate rewards in profitability.
Prioritizing customer loyalty is both strategic and economically lucrative.	Given the significant profit implications, businesses must recognize and act upon the value of retaining their clientele.

Source: HBR

AI Promises to Slash Client Acquisition Costs by Half

Important takeaway:

Insight from Data	Rationale
AI is a transformative tool for reducing acquisition costs.	The potential to halve client acquisition costs showcases AI’s efficacy in streamlining and optimizing outreach efforts.
Technological advancements offer cost-effective solutions.	The data emphasizes that leveraging AI can lead to substantial financial savings in business operations.
Embracing AI in acquisition strategies is economically prudent.	Given the marked reduction in costs, integrating AI is becoming indispensable for competitive and efficient client acquisition.

Source: IBM

Staggering 222% Surge in Customer Acquisition Costs, Latest Research Shows

Important takeaway:

Insight from Data	Rationale
Customer acquisition is becoming significantly more expensive.	A staggering 222% increase reveals a transformative shift in the cost dynamics of acquiring new clients.
Current market conditions demand strategic reevaluation.	Such a pronounced hike suggests that traditional acquisition methods may no longer be as effective or sustainable.
Adapting to this new financial landscape is imperative for business survival.	Given the dramatic cost surge, companies must innovate and recalibrate their strategies to ensure continued profitability and growth.

Source: Simplicity DX

Brands Incurring Hefty $29 Loss per New Customer Acquisition

Important takeaway:

Insight from Data	Rationale
Customer acquisition is now a tangible financial liability.	Brands are incurring a noteworthy loss of $29 for every new customer, signaling an urgent need for review and strategy overhaul.
Traditional acquisition strategies might be unsustainable.	Such a definitive loss suggests that conventional methods might be misaligned with current market dynamics.
Reassessing and innovating acquisition practices is crucial.	In light of this monetary drain, businesses must reconsider their approaches to ensure financial viability and sustainability.

Source: Business Wire

B2B Companies Average Customer Acquisition Cost: A Steep $536

Important takeaway:

Insight from Data	Rationale
B2B customer acquisition is notably capital-intensive.	An average cost of $536 underscores the significant investment required to secure new clientele in the B2B space.
B2B markets demand targeted and specialized strategies.	The substantial cost points to the nuanced and tailored approaches necessary to effectively penetrate B2B sectors.
Efficient allocation of resources is pivotal in B2B landscapes.	Given the pronounced expenditure, businesses must ensure that their acquisition methods are optimized for the best possible return on investment.

Source: User Pilot