We all know that the best and least expensive marketing results arise from repeat and referral business, but how well do you quantify and systematize the customer retention process?
Marketing consultant Adams Hudson offers these observations from the book: Leading on the Edge of Chaos by Emmett C. Murphy and Mark A. Murphy:
- Acquiring new customers can cost five times more than satisfying and retaining current customers.
- A two per cent increase in customer retention has the same effect on profits as cutting costs by 10 per cent.
- The average company loses 10 per cent of its customers each year.
- A five per cent reduction in customer defection rate can increase profits by 25-125 per cent, depending on the industry.
Let’s look at these numbers and appreciate their implications.
Say, times are challenging, and your bean-counters want to cut costs — but how much do you save if you blow the good-will from genuinely happy clients?
Conversely, if you are spending any money on marketing, you’ll leverage it incredibly with solid customer appreciation and service initiatives.
Sadly however, far too many architectural, engineering and construction businesses fail to quantify or allocate dedicated resources to client retention and appreciation programs.