Customer Retention refers to the ability of a company or product to retain its customers over some specified period. High retention means customers of the product or business tend to return to, continue to buy, or in some other way not defect to another product or business.
The Economics
It is significantly cheaper (5-25x) to retain an existing customer than to acquire a new one. Increasing retention rates by just 5% can increase profits by 25% to 95%.
The Value-First Perspective
Retention is not a “tactic” to prevent escape; it is the natural result of Relationship Health.
- Don’t build “lock-in” (making it hard to leave).
- Do build “loyalty” (making them want to stay).
Focus on Value Realization (Adopter Stage). If they are getting value, they will stay. If they aren’t, no amount of “retention marketing” will save them.