The average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships. In some industries, this leakage is as high as 80 percent. The cost, in either case, is staggering, but few businesses truly understand the implications.
Imagine two businesses, one that retains 90 percent of its customers, the other retaining 80 percent. If both add new customers at the rate of 20 percent per year, the first will have a 10 percent net growth in customers per year, while the other will have none. Over seven years, the first firm will virtually double, while the second will have no real growth. Everything else being equal, that 10-percent advantage in customer retention will result in a doubling of customers every seven years without doing anything else.