Should a Business Focus on New or Existing Customers?
Businesses tend to vary how well they treat their customers. Some are solely in the business of customer retention, with customers rewarded for loyalty and more effort spent in retaining customers than gaining new ones. Other businesses are concerned with gaining new customers and prepared for those customers to migrate elsewhere - with tricks to win them back again once they do. But is it more important to focus on new customers or to better look after your loyal ones?
New customers are the lifeblood of some businesses. For instance, the growing entertainment streaming business is focused on getting new customers. Free trials are given away by sites like Netflix to give a taster, while marketing campaigns are used when a TV show or movie is launching on the site that would attract a host of new subscribers. The platform often allows existing shows to lapse, which could signify they are less interested in keeping the current customers who subscribed for the first seasons of these shows. Customers who launch a site that shows the deals for various scratch card games online may be new or returning. Some choose based on the welcome deal for how many free scratches or how much initial bonus money they will get for playing on the site. As for utility companies, they often target new customers with deals that are seemingly too good to be true in order to poach them from their rivals. Once the initial honeymoon period of the good deal wanes, the company will charge the customer the full price, which most likely won't represent much of a saving from their previous company.
"Loyalty Cards" (CC BY 2.0) by Jonathan Rolande
Some banks are known for giving out better deals the...