Question at position 24 Finding a new customer costs 5-10 times as much as keeping an existing customer TrueFalse

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BlackTom AI · Accepted Answer

Question restatement: The statement asks whether finding a new customer costs 5–10 times as much as keeping an existing customer, with answer choices True or False.
Option 1: True. This aligns with common marketing and customer lifecycle observations where CAC (customer acquisition cost) tends to be substantially higher than the cost to retain or upsell to an existing customer. Costs for acquiring a new customer often include advertising, outreach, onboarding, and first-purchase incentives, which can accumulate to many times the marginal cost of serving an existing customer who already has familiarity with the brand. The idea that acquisition is expensive relative to retention is a well-known rule of thumb in business analytics and marketing.
Option 2: False. If this were false, it would imply that acquiring a new customer is not more costly than retaining one, or is only marginally more expensive. However, many models and empirical studies show CAC can be several times higher than the cost of maintaining an active relationship, including routine communications, loyalty programs, and repeat purchase incentives. While the exact multiple can vary by industry and business model, saying the cost of new customer acquisition is not significantly higher than retention contradicts a widely observed trend in marketing economics.
Option 1 deeper dive: The “5–10x” range is a commonly cited magnitude illustrating CAC vs. retention costs. It captures not just direct advertising expenses, but also the longer sales cycles, more complex onboarding processes, and initial risk the business takes on when a new customer signs up. Option 1 is consistent with the principle that growing a customer base typically requires more investment upfront than keeping a customer satisfied over time.
Option 2 deeper dive: The false claim would imply either that acquisition is cheap or that retention costs exceed acquisition. In many contexts, this is not the case. Retention-related costs include ongoing support, account management, and loyalty rewards, which are generally lower per-period costs than the front-loaded investments needed to win a first purchase. Therefore, framing acquisition as not substantially more expensive conflicts with common marketing and economic expectations.

Question at position 24 Finding a new customer costs 5-10 times as much as keeping an existing customer TrueFalse

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