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The single most important strategy you need for revenue growth

Posted by Perceptive Insights Team - 18 May, 2016

Today a large number of businesses are deceived in to thinking that having a great product or service automatically translates to being a profitable business. This simply isn’t the case. You need a solid customer retention strategy to maintain your profitability, throughout the highs and lows of your business events and sales cycles.  

If your business employs solid customer retention strategies, you'll see higher customer satisfaction levels which can translate into revenue growth for your business as happy customers become repeat customers.

With this in mind, here are three reasons why customer retention is a critically important strategy for revenue growth. 

 

Related content: The customer retention playbook [free guide]

 

1. Cost of replacing customers higher than keeping customers

If you’re losing customers you’re basically losing money. And lots of it. The cost of replacing your lost customers with new ones is alarmingly high (taking into account acquisition costs in advertising, managing sales and time spent for conversion). The cost of customer acquisition is six to seven times more than customer retention.1

The single most important strategy you need for a profitable business

2. Lose up to 95 per cent profit increase

Keeping your existing customers loyal is more cost efficient than constantly trying to acquire new customers.  The stats say it all: a 5 per cent lift in customer retention can actually result in an increase in profit by as much as an astounding 95 per cent.2 So, another way of looking at this would be: if you ignore customer retention, you could lose out on a 95 per cent profit increase. Now, why would you want to do that?

3. Increasing customer retention levels boosts company value

A 10 per cent increase in customer retention levels can result in a 30 per cent increase in the value of the company.3 And if you’re still not sold yet, Gartner Group states that as much as 80 per cent of your company’s future revenue will come from just 20 per cent of your existing customers.4  So, the moral of the story is: better take well care of them—or else.

Want to retain and acquire more customers to boost revenue? Check out our customer retention guide below:

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1. Understanding Customers, by Ruby Newell-Legner

2. Bain & Co

3. ibid.

4. Gartner Group

Topics: Customer Experience


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