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Customer Retention Increases Profits

Before we get into why you need One Loyalty Network, we should explain the basics....Customer Retention. You may be asking "What is so important about customer retention?" Customer Retention (and customer satisfaction) have a direct impact on driving profits higher. The retention part of customer retention refers to keeping your current clients as opposed to your current clients using your competitor's products or services. Businesses want to reduce customer defection (increase customer retention) because an obvious decrease in profitability will incur if those defecting customers are not replaced. Here are a couple interesting stats for you regarding customer retention:

  • Acquiring new customers is 5 times more expensive than retaining existing customers.1
  • A 2% increase in customer retention has the same effect as cutting costs by 10%.1
  • A 5% decrease in customer defection can increase profits anywhere from 25% to 125%, depending on the industry.1
  • A strong link exists between customer loyalty and customer referrals.2
  • Long term customers tend to be less inclined to switch to a competitor and are also less sensitive to pricing fluctuations.3
  • Repeat customers tend to be less expensive to service because they are familiar with the process involved. They require less education and are consistent with new orders.3

As you can plainly see, retaining your existing customers is not only important, but vital to your plan to increase your business' profit model. At One Loyalty Network, we'll consistently provide you with a means to track your customers and their spending habits. With accurate data on their spending habits, you can make intelligent decisions on exactly how to keep your customers satisfied and happy. Your customer retention levels will only go up by using the loyalty platform provided by One Loyalty Network.

 

 

References
1 Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy
2 Frederick F. Reichheld
3 Wikipedia Loyalty Business Model

 

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