Never Lose a Customer Again: Turn Any Sale into Lifelong Loyalty in 100 Days

by Joey Coleman

Across a wide range of industries, a 5 percent improvement in customer retention rates will yield a 25 to 100 percent increase in profits. Or so says Frederick Reichheld in his book The Loyalty Effect.4 If you are like me and not that good at math, you are probably skeptical about this claim. How can 5 percent equate to 25 to 100 percent? You may not know who Reichheld is, but you’ve certainly been exposed to his work. Reichheld is a New York Times best-selling author and business strategist best known for his work in the area of loyalty business models and loyalty marketing. You’re probably more familiar with his Net Promoter System of management. Here’s the way Reichheld says that it works: The typical business is running at some semblance of a profit. Each retained customer increases the overall profit of the business because: the carrying cost of keeping a new customer is not nearly as high as the cost of bringing on a new customer, and when sales and marketing costs go to zero, all money being spent on customer acquisition stays in the business and flows directly to the bottom line.