If you better customer retention with 5%, you should increase profitability with 25-95% on average.
If you better customer retention with 10%, you should increase profitability with 50-180%.
If you better customer retention with 15%, you should increase profitability with 75-275%.
The most common rebuttal we come across are;
- “We are already doing all we can.”
- “Our customer retention is as good as it gets.”
- “We are doing everything by the book.”
- “We have the best in the business working on it.”
First of all, there is always room for improvement; really successful businesses are still on the lookout for a new competitive edge.
The “book” is good, but not complete. We see new technology and solutions developed on a daily bases. Best practice yesterday may not even make the top 10 today.
Are you sure they are the best in the business? If so, you know, because your top line, bottom line, and profitability is a dead giveaway.
To get the whole scope of this, I will try to provide an example: Two similar companies.
One with an excellent customer experience development program and, thus, good customer retention.
Against a company with an average customer experience program and, thus, average customer retention.
Short term, the company with excellent customer retention will, on average, make two or three times as much profit for its owners.
Long term, the company with excellent customer retention will outgrow the company with average customer retention with 10-20% annually.
Making the company twice as big in just five years.