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Why focusing solely on new client acquisition is not your best option to gain business during a slow

No matter how businesses re-imagine themselves and mitigate against the impact of recent events, the business of the future will still live or die by Peter Drucker, the legendary management guru’s simple principle: “The purpose of business is to create and keep a customer.” 

However, due to relentless earning pressures and bias toward quarterly financial reporting, few managers get past priority number one: new client acquisition.

Economic slowdowns and cash strapped circumstances tend to highlight the importance of customer retention. Businesses double down on keeping clients but since few companies have true customer success/retention focused systems in place, they get mixed results. As a result, they are likely to revert back to focusing on new client acquisition. 

However, there is another way to move forward. It is complementary, cost-effective, has a considerably shorter sales cycle and could still bring in additional business, yet it is hardly ever discussed in the boardroom. It is client reactivation.

This article discusses why businesses should consider this undervalued or simply forgotten option to gain business. 

The seemingly obvious choices

New client acquisition

According to a study done by the Research Institute of America for the White House Office of Consumer Affairs, it is 6-7 times more expensive to acquire a new client than to keep one. The probability of selling to an existing client is 60-70% compared to 5-20% in the case of a new client, yet the majority of commercial teams still push new client acquisition as a primary objective. 

Some businesses use this strategy because they need to make up for lost ground. Most companies default to new customer acquisition when trying to achieve short term quarterly targets. Companies don’t necessarily choose new customer acquisition over retention because they don’t care about lifetime value or customer value. Entrenched corporate accounting practices, traditional organisational structures and the lack of capabilities needed to prioritise customer value simply don’t allow them to do otherwise.

New client generating activities are a viable option for businesses that have backend offers and an effective and measurable systemised process in place that could be used to track and optimise results, but they shouldn’t be the sole choice for businesses that want to move forward in a harsh economic climate.


Focussing on earning customer loyalty, providing value to clients and increasing the number and/or size of purchases has positive financial impacts. Rob Markey’s HBR article notes that “loyalty leaders grow roughly 2.5 times as fast as their industry peers and deliver 2 to 5 times the shareholder returns over the next 10 years.

On top of this, customer success or retention activities enable companies to gain and leverage assets such as case studies and testimonials and most importantly to generate referrals. 

Referred clients are less likely to price shop, usually don’t experience buyer’s remorse and tend to stay with a business longer. When considering the cost of acquisition and lifetime value, generating referrals is the least expensive, least risky and most profitable activity a business could invest in.

The combination of customer success teams, backend products/services and a referral system that consistently produces high-value prospects is the far superior growth driver to new client acquisition, yet in the boardrooms, retention gets less attention. 

Most companies do not measure performance by customer value and since their technologies, operational skills, and performance measurement systems are not robust enough to rigorously measure, track and report customer value, pursuing customer retention as a primary strategy could still be seen as a risky proposition. 

The overlooked solution

When in need of cash businesses don’t necessarily have the opportunity or the resources to implement and thoroughly test new systems that could enable them to acquire and retain more clients. Most importantly, they don’t have the time to experiment with new solutions. To buy some time they could audit and optimise current processes and leverage pre-existing client relationships to regain lost clients. 

If a business has been around for some time (2-5 years), it is likely to have a list of customers who are no longer doing business with them. We could consider lost customers as a forest of cacti. Cacti are prickly but have water inside. Inactive or lost clients are similar in this regard and likely to have the cash that cash strapped businesses need.

To gauge the business impact of lost clients, it is best to start with crunching the numbers and figuring out attrition (the number of clients lost). The attrition number could look discouraging at first glance, but understanding the reasons why clients stop buying or using a service can help businesses see this number in a new light.

3 Reasons why clients leave a business

1. Changed habits / forgetfulness

Outside events can force clients to temporarily stop dealing with businesses. Initially, they intend to come back, but life can get in the way and habits and behaviours change. The result: they simply forget about the product or service they used to use. This true for B2B and B2C alike.  

Over 50% of inactive clients are likely to belong to this group and reactivating them could be faster and more cost-effective than pursuing new prospects who are not familiar with the product or service and the business itself. 

2. Unsatisfying last purchase or service experience

Although the sales and or customer service team probably never heard a complaint from them, these clients left because they had an unresolved problem or unsatisfying last experience with the product or service. 

According to a study done by the Research Institute of America for the White House Office of Consumer Affairs, only 4% of unhappy clients bother to complain. If those complaints are addressed 70% of the complainers will keep doing business with the organisation. If the complaint is addressed quickly then that number goes up to 95%. 

The same study also states that 90% of unhappy customers will never come back. The main identified driver behind this high percentage is company indifference. (In fact, 68% referred to this reason.) 

The important thing to recognise here is that 

  1. Businesses and their employees are rarely intentionally indifferent towards clients whom they unknowingly offend, dissatisfy or fail to acknowledge. 

  2. The reasons clients leave are most likely repairable if explored thoroughly.

A strategy devised to win these clients back could, in turn, result in an excellent source of referrals. 

3. No more client benefit 

In this case, the reasons are irreparable; clients’ situation has changed to the point they no longer benefit from the product or service the business provides. Although moving on could seem to be the best tactic here, there’s value in previous working relationships. 

Since this group of clients still have stored respect, goodwill and connection to the business, contacting them in a genuinely caring way can benefit operations on many levels: business can gain impactful insights, positioning advantage and referrals.

Next Steps

The best way to tackle attrition is by focusing on retention. However, when businesses do lose a client because of a negative encounter, change of habit or behaviour altering event such as a serious recession, all is not lost. 

Businesses that make a genuine effort to acknowledge clients and their value, try to understand their situation and apologise for problems they caused, can regain clients. The success rate of reactivation depends on various aspects of reactivation campaigns such as messaging, positioning, funnels, follow-up, the time elapsed since the client left, but overall reactivation campaigns are cheaper and can bring in business faster than new client acquisition. And they come with added bonuses: feedback and referrals. 

For businesses that recently reopened or switched gears, it might be a good idea to conduct audits and tests to see whether their current messaging and positioning resonates with their audience. Once messaging has been brushed up, adding reactivation campaigns into the mix is a cost-effective way to move forward. Whatever communication method a business chooses (personal, over the phone, letter, email, or the combination of different mediums) once lost clients are back on board, there is a high probability they will become the most loyal and profitable clients the business has ever had.



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