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Startling Statistics on Customer Retention & Acquisition

Where should you spend your marketing dollars?  How many customers have you lost in the last five years?  How many customers have you gained in the last five years?  How important are your customers to you?  (Silly question?)  Consider this statement from The Harvard Business Review which said that the average business loses 50% of their customers every five years.

Which is better: retaining current customers or adding new customers?  That really is not a question that you can answer without saying both are important.  Authors Emmet C. Murphy and Mark A. Murphy made several impressive statements in their book, Leading on the Edge of Chaos.

  • Acquiring new customers can cost as much as five times more than satisfying and retaining current customers
  • A 2% increase in customer retention has the same effect as decreasing costs by 10%
  • Depending on the industry, reducing your customer defection rate by 5% can increase your profitability by 25 to 125%
  • Customer profitability tends to increase over the life of a retained customer

What is the likelihood that you will retain your customers?  What do those numbers mean to you and the success of your company?  Have you evaluated your customer retention rate?  Do you have a plan to keep your customers?  Do you have the tools to make that job easier?  Here are the reasons customers leave, according to the U.S. Small Business Administration and the U.S. Chamber of Commerce:

  • 68% leave because they are upset with the treatment they’ve received (Customer Service)
  • 14% are dissatisfied with the product or service
  • 9% begin doing business with the competition
  • 5% seek alternatives or develop other business relationships
  • 3% move away
  • 1% die

Perception versus Reality:  RightNow Technologies says 73% of customers leave because they are dissatisfied with customer service, but the company losing the customer thinks only 21% leave because of customer service.  The company losing the customer thinks 48% leave because of price, when in fact only 25% do so.  It is hard to believe that our customers don’t love us.  We would rather believe that price is the culprit.  It hurts our feelings less, but costs our company significantly more, because not only have we lost the customer, but more than likely we lowered our prices to try to keep them.

What should you do?  The first step is to make sure that your customers don’t leave.  Keep them satisfied.  Keep them happy.  Keep them coming back.

  • The first question to ask is does my computer system support my company as we meet the needs of our customers?  Take our FREE Online Business Systems Health Test to assess eight critical areas and get an overall analysis of your automation system.
  • Then consider, does your ERP (Enterprise Resource Planning) system support your requirements for customer pricing, inventory availability, delivery methodology or whatever else your customers demand?  Does it enable you to fulfill your company’s objectives as you exploit your business niche?
  • Check these links if you are a Distributor or a Manufacturer for custom information to help you determine what you need in an ERP system.  Your company needs strong tools to help you accomplish your goals.
  • Your ERP system is the first tool in your arsenal. It is surrounded by other tools like your

You have to find a way to manage and provide the high-touch, personalized ordering and delivery systems your customers demand in a way that enables your company to grow profitably.  Your ERP system should help you get that job done effectively and efficiently.

Your business system can help you retain your customers and help you find ways to match the needs of your new customer to maximize each customer’s value.  For example, we recently worked with a distributor who wanted to take over an account that had lots of little orders.  We helped them devise an order import system from spreadsheets.  They increased their order transaction volume by 21% without adding any additional staff.  The customer was happy because the distributor managed the customer’s budget and got the orders delivered on a timely basis.  The distributor was happy because they were able to make low dollars orders profitable through automation.

Call (877-571-8580), email ( us, we can help.  Or click here for a free consultation to get you started.



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Questions to ask yourself about your business - right now:

Let BASM help you evaluate the health of your business system and confirm if your current automation system is on par with current technology. Take our free Online Business Systems Health Test© to get viable answers to these and other questions today.

We designed this test to help you quantify and dispel the painful feeling that something is wrong with your business system. While this is not a functional assessment, your results will give you two grades on your current automation.

Take the test now so you can see where your business currently stands and get:

While you may be doing well overall, you can never be too sure if there is an area of your business that you can improve. Our free assessment can assist you in taking your business to the next level, and provides you with a brief recap and the recommendations you need to consider if changes are required.

You have nothing to lose and your business has all to gain!

We highly encourage you to get multiple people from your company take this test. You will find each person will have different rankings and objectivity when looking at your system. For example, employees in Customer Service will have a varying perspective compared to your employees in Accounting.

By having multiple people in various departments take the test, you will gain a larger overview, as well as validate your own assessment.