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How much does a lost customer cost your company?
Best Answer
Everyone will say it depends on what you charge for your products and services plus the amount of times that customer would have required your services over time, you will also have to add the amount of people who will now stay away from your services due to bad references.
It's tricky to calculate and surely depends on many factors. I wonder how many businesses actually take the time to determine the true value.
It depends on why the customer was lost. If, for example, you lost a customer because your company has a lousy website and the customer couldn't figure out your convoluted shopping cart, got frustrated and left, that means a lost sale. It also means future lost sales because the customer will not likely return.
If you alienated the customer by providing lousy customer service, shoddy products, slow delivery, failed to honor your return policy, and so on, then not only will you loose sales from that customer- you will loose sales from other people because the dissatisfied customer will bad-mouth you. They may even do it publicly on blogs, Twitter, and so on. That will cost you lost sales big time.
You're right. Word of mouth is a huge deal, especially with emerging media. I think about the "United breaks guitars" video for example.
what is the cost of acquiring a new customer to replace the lost one + what is the lifetime value of an average client, add those two figures up.
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Related Activity
Hi Don-
In writing about customer service and customer experience, I've run across quite a bit of useful data on this topic. A few statistics that stand out for trying to measure the cost of a lost customer:
*It's 6-7 times more expensive to acquire a new customer than it is to keep an old one.
*Loyal customers are worth up to 10 times as much as their first purchase.
*The probability of selling to an existing customer: 60-70%. Of selling to a new customer: 5-20%.
For more data insights, scan through the free ebook "75 Customer Service Facts, Quotes & Statistics." Chapter 1, "The Cost of Bad Customer Service," offers excellent analysis around your question. The ebook can be downloaded here: http://hlp.sc/xrfMQQ