Purchase Solution

Compare and contrast the cost of customer retention vs customer acquistion

Not what you're looking for?

Ask Custom Question

Write a paper in which you compare and contrast the cost of customer retention versus customer acquisition.

Purchase this Solution

Solution Summary

The expert compares and contrasts the cost customer retention versus customer acquisition.

Solution Preview

Companies have realised that they require more analysis of campaigns and need to compute and manage return on marketing investment. In addition to this, companies have become aware with the need to justify and line up the cost of serving customers with the value rendered by the relationships. Due to this consideration of cost of customer retention and cost of customer acquisition has emerged. Here in this paper, the comparison and contrast among the cost of customer retention and customer acquisition will be discussed.

Cost of Customer Retention
Customer retention pertains to the percentage of customer relationships that, once instituted, a business is capable to assert on a long-term basis. It is a main conducive factor in the net growth rate of businesses (Pogol, 2007). This could also be understood with an example, a company that step-ups its number of new customers by 20 percent in a year but retains only 85 percent of its subsisting customers will have a net growth rate of only 5 percent (20 percent increment less 15 percent diminish). But the company could triple its growth rate by retaining 95 percent of its customers.

With this example it is clear that growth is one experience that companies can confront with increased retention rates but with this their profits should also improve substantially as with this customers stay on board for more retentive periods of time. The cost of developing new customers and laying them on the boards normally extends two to four times to the annual cost of attending existing customers (Customer Acquisition and Retention, 2008). So, with this it can be said that the longer an organization keep its customers, the more years over it can spread its one-time cost.

Customer Acquisition Cost
Customer acquisition cost is the cost consociated ...

Purchase this Solution


Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.