Most business owners know the cost of acquiring a new customer is much higher than retaining a current one. But just in case you need some convincing, here are a few statistics from Leading on the Edge of Chaos by Emmett C. Murphy and Mark A. Murphy.
1. Acquiring new customers can cost five times more than satisfying and retaining current customers.
2. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
3. The average company loses 10% of its customers each year.
4. A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry.
5. The customer profitability rate tends to increase over the life of a retained customer.
Those numbers are pretty astonishing and they point out just how critical it is to spend time improving your customer retention process.