Customer Service Speaker Doubts The "Value" Of Customers


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The first time I read the statistic, I was having a quick bite of breakfast before scooting off to run a seminar at the Houston office of a customer service consulting client.

“It costs five times more to attract a new customer as it does to keep an existing customer” bellowed the article in the Houston Chronicle.

“Wow!” I thought. That’s a lot.

But then, that statistic bothered me, for several reasons:

(1) Who said so? On what authority did they say it?

(2) How much, in dollar terms, are we speaking of?

(3) What business or industry is keeping the customer?

(4) What business or industry is attracting the new customer?

(5) What measures are being used to determine sales costs versus retention costs?

Anyway, I put these concerns aside for some time, and until I saw the same assertion, yet it said: “It costs ten times” as much to get a new customer.

Well, inflation is kicking up, but then, wait a minute!

Let’s research this point. I went to Google and asked the question: “Costs of keeping versus losing customers?”

The results varied. One source, a college business journal, which would be expected to track down these claims, actually perpetuates the confusion by saying:

“It is generally accepted that it costs a business anywhere from five to ten times as much to acquire a new customer as it costs to retain an existing one. Some studies have estimated that U. S.organizations lose half their customers every five years and that a five percent incremental improvement in customer retention rate could double profits. On the downside, disloyalty is estimated to decrease corporate performance by 25 to 50 percent. ”

I don’t “generally accept” statistics on their face value, nor should you.

If you really want to know the value of a customer, track it for yourself in your own business.

Then, you’ll really know what you’re talking about and you’ll be able to allocate your training and marketing resources, appropriately.

Dr. Gary S. Goodman, President of , is a popular keynote speaker, management consultant, and seminar leader and the best-selling author of 12 books, including Reach Out & Sell Someone and Monitoring, Measuring & Managing Customer Service, and the audio program, “The Law of Large Numbers: How To Make Success Inevitable, " published by Nightingale-Conant. He is a frequent guest on radio and television, worldwide. A Ph. D. from USC's Annenberg School, a Loyola lawyer, and an MBA from the Peter F. Drucker School at Claremont Graduate University, Gary offers programs through UCLA Extension and numerous universities, trade associations, and other organizations from Santa Monica to South Africa. He holds the rank of Shodan, 1st Degree Black Belt in Kenpo Karate. He is headquartered in Glendale, California, and he can be reached at (818) 243-7338 or at:

For information about coaching, consulting, training, books, videos and audios, please go to


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