Cost of churn vs. acquisition

Customer turnover ("churn") is costing Australian businesses more than $1.5 billion per year. But I'll bet companies are spending far more than that on customer acquisition.

Imagine how many marketing dollars are spent by the likes of Telstra and Netspeed on trying to get customers to join. If they spent a minute fraction of these marketing dollars on improving customer service (or improving the quality of the product itself), their bottom line would thank them.

Gone are the days when you can steamroll customers, and they'll stick with you out of loyalty. If a customer is dissatisfied with your service or product, they'll change. It's pretty well known that a dissatisfied customer will tell around 10 people about their poor experience. A satisfied customer will however on average only tell 5 people.

But by far the best example I can think of companies shunning their customers is Three. They focus all of their marketing efforts on new customers. Reduced-price broadband, handsets, etc. Notice how Three does not consider offering any benefits to existing customers.

Take a look at Three's Mobile broadband offer: $15/mo for 1GB. Existing customers with an eligible handset aren't as lucky though. Instead, to get 1GB of data, you're rorted for $30/mo. How does this make sense??