Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success

by Sean Ellis

To illustrate the power of small gains, Peep Laja, a renowned expert in conversion rate optimization—the science of getting more visitors to a website or app to become customers—loves to point out that a 5 percent improvement in conversion rate every month nets an 80 percent improvement in a year due to the compounding nature of wins. If you were generating visitors through search ads, that increase in conversions would cut your costs of advertising per customer just about in half. This same principle applies everywhere in a company. In fact, small increases in retention can be even more powerful. As a team of researchers from Bain & Company and Harvard Business School discovered, a 5 percent increase in retention leads to an increase in profits of between 25 and 95 percent, because just small gains in retention lead to compounding revenue growth the longer customers stick around.2