Flip the Funnel: How to Use Existing Customers to Gain New Ones

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The Economic Benefits of Customer Experience

It’s been a long time coming, but there’s an increasing amount of physical proof that validates what we’ve always known (but perhaps ignored) for the longest time about a flipped-funnel approach to business. Investing in your customers pays tremendous dividends.

Conventional thinking held that it costs roughly 5 to 10 times⁴⁷ the amount to acquire a new customer than it does to retain an existing one. With the advent of the Internet and other electronic forms of marketing, these numbers only skew higher in favor of retention. However, what these numbers don’t take into account are the additional economic benefits that businesses enjoy from both repeat purchases and, more pointedly, new business via word of mouth from existing ones. It’s a bit of a mouthful, but it essentially says, “Flip the funnel now!”

Here’s a simple place to start. Fill in this grid please.

Acquisition (First Purchase)	Retention (2 or More Purchases)
% Budget Spent Revenue Received

My guess is that if you’re relatively healthy and functional, you’re going to see about 65 percent to 75 percent of your current revenue coming from returning customers. However, the dollars invested in this segment are most likely going to be the exact inverse, about 25 percent to 35 percent. What would happen if you changed that, if you flipped that equation and focused the lion’s share of your budget on the people who keep you in business? What if you considered retention ...