How come new customers always seem to get better deals?
Is it that companies are more willing to give discounts and offers to new customers, but not to their existing ones?
Is it a case that companies tend to take their existing customers for granted?
If not, then why do new customers get better deals?
Unfortunately, the dirty secret of customer acquisition in many businesses is that new customers are more valuable than loyal, old customers and sales team incentives are skewed towards winning new customers.
In this article, we will try to understand why businesses focus more on attracting new customers rather than on trying to keep the ones they already have.
5 Main Reasons Why New Customers Get Better Deals
- Growth comes from new customers
- Winning new customers is difficult (and expensive)
- Customers in new markets need incentives
- Loyal customers are already loyal
- Sales teams are incentivized to acquire new customers
1. Growth comes from new customers
A business can grow in one of two ways. By selling more to existing customers or by finding new customers to sell to.
In many cases, it just isn’t possible to sell more to existing customers. This can be because their budgets are maxed out or, as can be with business customers because they have internal limits on how much they can spend on a single supplier.
So the simple fact of business is this: A company can only grow if it acquires more customers than it loses. And this is why new customers always get better deals – whether it’s through discounts, loyalty programs, or some other form of incentive.
2. Winning new customers is difficult (and expensive)
It’s no secret that acquiring new customers is more difficult and expensive than retaining existing ones. So why do businesses continue to put so much effort into winning new customers?
The answer is simple: because it works. New customers are essential for growth, and the best way to attract them is by offering them better deals than your current customers.
This isn’t always easy, but it’s worth the effort. By rewarding new customers with unbeatable deals, companies can quickly win their loyalty and increase their market share.
3. Customers in new markets need incentives
Customers in new markets need incentives to buy from a company they’ve never heard of and that lacks brand recognition.
This is why customers in new markets always get better deals – the company needs to make up for the fact that these customers are taking a risk by buying from them.
Offering a good deal is the best way to lower the barrier to entry and convince these customers to try a new product or service.
4. Loyal customers are already loyal
Many companies feel that their loyal customers do not need any extra incentive to stick around.
Depending on the circumstances, there might be some truth to this. Loyal customers are loyal for a reason. They are often loyal because they trust the company they are buying from and they already know that the company’s product or services satisfy their needs.
As loyal customers are less likely to switch, they’re often not as important of a target for customer acquisition campaigns as are potential new customers.
5. Sales teams are incentivized to acquire new customers
Because many companies take existing customers for granted and prioritize new customer acquisition over growing sales from existing customers, the compensation and incentive structure of sales teams is also often skewed towards acquiring new customers.
Many companies will pay large bonuses for new customers won and smaller commissions on additional sales from existing customers.
Since marketing offers are crafted by marketing and sales teams to generate new sales leads, it’s no surprise that new customers get better deals.
So there you have it – the dirty secret of customer acquisition. Why do new customers get better deals? Because acquiring them is a higher priority and is more difficult than getting additional sales from existing customers.
Loyal customers are already loyal. Many companies will take them for granted. Companies are looking for growth. And growth comes from new customers.
Companies are also looking for diversification and not relying on the same set of customers. This too creates a greater incentive to hunt for new customers rather than farm existing ones.