Customer retention is cheaper and much more beneficial over the long haul, compared to customer acquisition. Well, that’s according to an infographic published by Invesp. Take a second to let that sink in, and think about all the efforts you’ve directed at marketing and tenant acquisition, as opposed to tenant retention.
Apparently, and rather surprisingly, the bulk of companies fall in this category. According to that survey, 44% of businesses focus substantially on customer acquisition, while only 18% pay more attention to customer retention.
Of course that should not be an issue, especially considering the all-too-common argument that new customers bring in the new cash- but then again, consider this…the average probability of selling to a new prospect is only 5-20%, while existing customers fall within the 60-70% range. Additionally, while 31% of new prospects would be willing to try new products, 50% of existing customers would not have a problem giving it a go.
All things considered, increasing your customer retention rate by 5% subsequently boosts profits by 25 to 95%. And this applies to all businesses, including real estate and property management.
Tenant retention is particularly critical because turnovers are expensive. In addition to lost income, you’ll possibly incur some repair and marketing costs, as you prepare property for incoming tenants. And that’s without mentioning the time that will be consumed screening new applicants, and negotiation corresponding leases.