Important facts to consider:

Fact # 1: 80% of a company’s revenue comes from 20% of its customers.

The 80-20 rule which is more commonly known as the Pareto principle has been the rule of thumb in business. As most companies get 80% of their sales from 20% of their clients, one must agree that the 2 most important goals in customer retention is to first foster the customers belonging in the 20% and, second, is to improve the relationship and purchasing frequency and volume of the other 80%.

With such a small percentage of the total customers actually providing the bulk of the revenue, and losing a single client from that crucial 20% will have a great impact on profit, the number of companies prioritizing customer retention is now rapidly growing. And establishing the sought after “customer loyalty” is not easily accomplished especially if you consider fact # 2.

Fact # 2: On average, a company experiences a 25% customer attrition rate per year.

Every year, there is a high possibility that ¼ of your clients will leave you. The top reasons why customers abandon a product or service are the following:

No longer buying the category of your product / service
Unhappy with the price of the product or the quality of service
Not satisfied with the product / service
Unhappy with how they are being treated

Measuring the satisfaction of your customers based on these 4 factors is crucial in maintaining a long and profitable relationship between you and your customers. And the importance of taking care of your clients is doubled when you include fact # 3 in the equation.

Fact # 3: It costs 6-7 times more to acquire a new customer than to keep an existing one.

For every dollar you spend in making an existing customer happy, you need to spend $6 more in order to get a new customer. The big difference in the cost of customer acquisition to retention gives more pressure to companies in increasing their spending budgets on customer retention programs. This investment is worth every penny especially once you take into account fact # 4.

—

Remy is a Promotional Adviser specializing on Custom Promo Pens, Custom Promo Hats and Custom Pens with Logo