Which is the best strategy: customer retention or go for new customers?

I strongly believe they are not mutually exclusive. Retaining the customers does not mean that there need not be a strategy for luring the new customers. Luring the new customers also required to stay ahead in the race and to spread your base in the market. I vote for the strategy that provide space for both Customer retention and luring the new customers. Lol.

     A structure may not be able to withstand its own weight without a strong plinth.

Initial or First customers are like a plinth and building can only get desired strength through their support.

The forever New customer approach is good for runaways alone.

Always. There can be no change in this! As it is easy to add new customers through existing customers. It is said one happy customer would bring in 10 more plus his existing business and loyalty.

Purvi Ghosh... Idea put forth by you is priceless!...You have persuaded me to support your idea without any skepticism!

Malladi you have hit the bulls eye.

Customer retention an dnew customers are like 2 eyes for marketing.

* For FMCG, Consumer durable, consumables, Hotels, Food products etc., in addition to maintaining the existing customers it is necessary to rope in new customers.

* For cinemas, Travel destinationsHouse Hold appliances, kitchenware, building matrials, vehicles, watches, mobiles new customers are required.Here references influence the decisions. As such old customers have a role.

However , it depends on the product to decide whom  to target.

I agree with you and also add one thing that a satisfied customer can increase your brand value by mouth publicity and help a firm to acquire new customers with out much cost.

if customer retention is increased by 1% than profitability of a product can be increased by 5% automatically.

today it is buyers market not sellers and role customer retention is very important in creating brand value of an organization

Yes! absolutely true  

Dear Paul,

-When missing out repeat customers, the numbers may not be adding as they may be simply replacing the previous.

-Costs are saved when your repeat customer acts as your brand ambassador.

- Existing customer's word is most effective whenever compared to ad campaigns.

- Repeat customers guide you to broaden the basket on offer through demand.

Dear Amrit,

This happens when company looses contact with its customer base. Change in product and process should be continual this does not require change of customer.

Keeping in touch with customer one forever has a better opportunity to learn demands and upgrade. In any case it is the word of existing customer most likely to succeed in getting new additions not expensive advertisements that may at best attract attention yet may fail to convert. 

Customer retention is easier than getting New customer,because in today competitive world customer retention is easier, they can itself create new customer for us.To satisfied a old customer itself create new customer.

The best way to retain a customer is to ensure he is delighted, this happens with top notch customer service,

Small things like "listening" not "hearing" to a customer makes things simple and can help increase customer loyalty. When the market saturates there is no use inventing the wheel, you have to think about keeping the wheel turning for long run, and existing customers are like spokes in the wheel loose one and your wheel looses balance. 

I believe that in this competitive and saturated  market"Retaining a happy customer is more cost effective than Regaining a lost customer or winning a New customer" Hence "RETAINING IS BETTER THAN REGAINING"

When we have an issue of customer retention v/s customer acquisition, most marketing strategies and campaignes are designed to acquire more customers and thus increase their customer base. However, we forget that, if we do not care about the people who are already on-board, the attrition rate will be very high, which can prove to be fatal for a business on long term basis.  In today's world of business, customer retention is not only a cost effective and profitable strategy, but it is necessary, because 80% of our sales come from 20% of our customer and clients. So, considering today's competition level and "survival of the fittest" policy of the economy, retaining our customer base is very critical to the success of a business. "If we don't give our customers some good reasons to stay, our competitors will give them a reason to leave".

Mr. Paul your point is accurate Because Business is game of risk. but What is the image/goodwill of company if it is not able to retain even his old customers. I agree that in competitive marketing strategy we have to look more and more new customer to join in market. But we have to retain our old customers too because If we are looking for fast business strategy then MAYBE WE ARE LACKING SOMEWHERE. Goodwill of company is more important in present scenario. Brand loyalty always based on company image. TATA is one of the best example for the same. 

How can we think to make new customers if we cant take care of our previous customers ? i think if we will provide the best services and make the friendly relation even with our past customers they will be loyal to company. They will promote the company as the best option available in market. Now days no one has enough time to think about the cost of product,  SO what a client want ? He want the best servicing and relation with company, he want his all queries should resolved .  I think customer retention is the best.

It is already a proven fact that 'Acquiring New Customer' is several times costlier than 'Retaining Exisiting Customer' my vote is for 'Customer Retention'.  Any experienced Saleman would know this, not speak of his/her Marketing Head the Company Management.

IT IS ALWAYS EASY TO GET BUISNESS FROM YOUR LOYAL CUSTOMER. IF YOU GIVE GOOD SERVICE TO YOUR LOYAL CUSTOMER THAN THEY ITSELF MARKET YOUR PRODUCT TO THERE BUISNESS PARTNER. MOUTH PUBLICITY IS BEST PUBLICITY.

I think everyone agrees that word-of-mouth marketing and advertising is the best ever for any product, be it a low involement or high involvement product.

Customer retention leads to a kind of brand loyality. Brand tribes provide useful feedback for the improvement of the product too!

In todays context customers must be retained which is very difficult owing to various factors like choice of various brands in the same product category,available across the length and breadth of the nation,added with increased awareness created by multi media ads coupled with down the line sales promotion activities attracting your existing customers.Present day consumers are highly demanding not easily satisfied with an open mind to change even for a marginal difference in quality and price.They are pushed by various sales promotion activities.Self service Department stores displaying a wide variety of different SKUs give ample opportunities to the customer to know more about any product.under such circumstances there is every possibility many customers opt for a change of brand loyalty.The ideal option will be to go all out to retain the existing customer base while simultaneously scouting for new buyers to  increase market share

I will support the idea of customer retention as i will cost less in terms of time/money & having more possiablitly to close him with new product line (consolidation) or repeat sale.

Dear sir,

I was not able to think such a small and deep answer.

You have explained everything in very few word.

Retained cusomers are brand ambassdors and give free word of mouth to new cusomers and help attain new cusomers.

thanks

Dear sir

I'm fully agree with your point but this is true for only those products which we need at all stages of lifecycle.

We demand different products as per demographic factors like age, income, profession, social class etc. When any of these changes we no more demand the products we are previously demanding but demand a different product as per our needs.

So by only retaining customers we can't survive. We need to put more effort on  retaining only those cusomers which are still meaningful i.e. customers whose need are still met by our products and who will going to demand our product in future and put less effort on unprofitable customers. So spend your money on acquiring new potiantial cusomers instead of spending on retaining unprofitable cusomers who are now not going to buy our products.

Thanks

I think you should divide marketing from operation.

If you've asked this question as an operational point of view, then keeping customers is the best strategy.

But from a marketing point of view, going after new customers is the best strategy.

Your existing customers are going to die off or gravitate to other brands so your marketing efforts need to focus on filling the pipeline.

Let me simplify this, If you are a jinni & Johnny, children wear brand. Then you cannot expect those children to remain brand loyal until their death. Whenever they grow, they will move towards other brands like Levi’s, Lawman, etc. So here you have to go for new customer strategy.

And, if another brand enters into your category and targeting the same audience, then there is a possibility that they switch from your brand to that new brand. In this situation, you should go for customer retention strategy.

So, first of all, you should try to find out the reason, why you are losing your customers? It’s because, they are growing or switching to other brands? And then you should use the appropriate strategy. Otherwise both the strategies are good, but it depends on your situation.

I think it is not correct. When an organization is able to serve their customers with quality products and services, their customers are retained.The relationship between the company and the customers are different from the relationship between the company and its employees. The first one is for business relation and for mutual benefits. Both will never try to part with each other. Moreover, in certain cases the company is ready to meet the demands of their customers, by sacrificing their profits up to some extent, with a view to keep their customers long association for their mutual business interest.

But in the second one the relationship is personal benefits. It is not acceptable that the organization is not believing its employees. Any organization success is the result of group efforts.

Retaining their existing customers is always good and no one can stop the organization to add new customers, of course it will take some time to understand each other to enter the main stream. But it is not advisable to loose its existing good customers, otherwise it back fire.     

No organization can survive without both. Customer retention enables an organization to maximize returns on the time and effort it has invested in that particular customer. On the other hand, new customers are like a shot in the arm.....it tells you that your product is still relevant in the space you are in. In short new customers (depending on the product) are like bulk income!! Retention provides recurring income!!!

I will have to say that a proper focus will be customer retention with an emphasis on acquisition of new customers. The relative proportion depends on the space your product is positioned in.

Now a days, it is the customer's testimonial or the clientele that speaks a lot about the company profile and services. We are moving towards services based economy than to a product based one so it becomes necessary to attract new customers while retaining the existing ones as many companies get repeat business as a result of improved services. It is very well said in marketing that it takes a lot of effort and cost to acquire a new customer.

For many of the industries like Telecom, Media, entertainment, Retail, rentention with CRM is the key to success. In these industries around 60%+ revenue comes from existing customers/repeat purchase. E.g VAS providers’ contribution to the total revenue of telecoms has been increasing from 2% to 10% in just 3 years. Customer Retention is Cost-Effective, but the Acquition is costlier than that. It doesn't mean that only retain the customers. Acquire and retain them with CRM.

Retention is not good strategy in some of the industries like automobile, electronics goods. But in this type of industies with retention and good CRM you can sell value added services easily to make atleast some %age of revenue.

new other is always a demanding one so spent much attention to those whome you already invested ur time and money

customer retention is very important,because existing customer works as a networking,it is only existing customer who brings new customer in business,besides it is very easy to convert the customer as he becomes loyal to the brand/company.so in short i think customer retention is very important than looking for new customer.

Suppose you have a restaurant people do visit frequently and always recommend to their friends. Most of your customer know you, praise you for your service,amenities etc. and you also gives them better and prior service than others !!!!

Question is, why is that so ?

Secondly, If the situation is vice-versa, than ?

 So ,Which among these two conditions you find best suitable ? First one which helps you to retain your loyal customer and helps you to find the new one through mouth publicity as well.

                                                          'OR'

The second one where you don't have a customer base ?

I go for customer retention, see indian banking growth during last 3 decades, banks who have retained their customers have not only survived the financial crisis, but have shown growth during Q3 FY 2009-10. Retention process, indicates a strong process within the organisation, the process is transparent & is reviewed frequently.

In a young organisation focus of a organisation at initial stages should be towards customer retension, till a break-even point is achieved, thereafter the focus should increase towards adding new customers. Cos which have merged or have not survived during financial crisis are the ones who had neglected old customers.

from personal experience i have observed that my excisting clients with whom i have an extremely great relationship have actually given me  a  lot more new clients from my project. in my organisation we have an employee reference reward scheme  which has helped us get more customer walkins and conversions too, casue it helps tha the people who referred them to us is our client and that we have a great relationship with all our excisting clients and it reflects.