There are several reasons why a firm might consider increasing its client base. For starters, expanding a firm with current consumers is less expensive than acquiring new clients. A company’s acquisition expenses are deemed high. The expenses include finding new consumers, convincing them to trust the firm, and convincing them to contribute their money by making an order. Furthermore, to get a new consumer, the firm must interact with the general public. That means that part of the investment is squandered since some people are uninterested in becoming customers.
Retention costs, on the other hand, are lower since the procedure requires less time and money. A consumer and the firm are already acquainted. The firm understands what a client likes, how he or she purchases, and how a product or service is used. From the prior experience, the customers already has the information about the products or the services of the company. As a result, it is simpler to communicate with them and expose them to the products or services of another firm. Second, conducting business with repeat consumers may boost a company’s profitability. Loyal customers become more lucrative over time because they prefer to focus their purchases, resulting in higher volumes, and reduced selling and distribution expenses. They also give good word-of-mouth and consumer referrals, and they may be ready to pay a premium for the value they get. Third, not all consumers are valued equally. Some consumers generate more revenue than others. A firm can evaluate how much time and investment should be spent on clients based on their worth. As a result, a firm will not spend resources on unproductive clients.
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