A fact that surprised me about client retention rates

I found a study saying that increasing client retention by just 5% can boost profits by 25% to 95%. That seems like a huge range, almost too wide to be useful. Do you buy that stat, or is it just marketing fluff dressed up as research?

3 comments

3 Comments

val9742d ago

Totally agree that 5% to 95% is a ridiculous spread, like saying "it might help a little or it might change everything" which isn't very helpful. But I think the core idea holds up if you look around at how things really work. Like think about any local business you go to regularly, maybe a coffee shop or a mechanic - they don't need to spend much on ads because returning customers bring in steady money and tell their friends. On the flip side, companies that churn through customers end up wasting a ton on constant marketing just to replace the ones they lost. That range probably exists because it depends so much on the industry and how much you spend to keep each client happy versus finding new ones. So yeah it's marketing fluff in a way, but there's a real lesson underneath about not taking your regulars for granted.

flores.mark2d ago

Hmm idk, I feel like local shops actually do spend a decent amount on keeping regulars happy, like free refills or loyalty punch cards. That's still a marketing cost isn't it?

wesley6392d ago

Actually that 5% number came from a specific study on grocery loyalty programs, not a general range.