A lot is wrong with this article, but this little gem stands out:

“Research shows that customer acquisition costs 5 to 25 times more than retention … If you can hang on to customers by developing loyalty, you'll end up spending much less on marketing.”

Really?

1. The cost of acquiring customers is typically over stated because people think of advertising purely as an acquisition cost. That’s why the article says improving loyalty can save you money. Pure bullshit — advertising also reminds current customers that you exist. If you cut back ad spend retention suffers too.

2. Retention costs are typically under stated because people assume loyal customers buy more and are more profitable. In reality people buy what they need - If I become loyal to Whole Foods I don’t suddenly start buying more food than I can eat. Loyal customers often expect lower prices and better service as a reward, making them less profitable over time.

3. The cost of acquisition or retention is irrelevant - it’s the profitability of the customer that matters. Retain a loss-making customer at low cost and you’re still losing money. Acquire a high margin customer at comparatively high cost and your business is growing. Duh.

Do the sums, make an informed decision, don’t believe the bullshit.

See this post on LinkedIn