Friday, December 14, 2007

Calculating the Reason for Retention Focus

We often think that Retention is something we will worry about later. we have so many other things on our to-do lists. I challenge you to do a quick math problem.

You will need your current number of accounts, the average retail value of those accounts, and a calculator.

Take your current number of accounts and multiply that number by a factor of just 2%. Then take that product and multiply it by the average retail cost of your accounts. That answer is the increased revenue that will be generated by a 2% increase in retention... Pretty eye opening.

Now consider that this money is very clean, there is not a lot of increased costs that come with it, so the money is truly very close to an increase in your net income..


Active accounts 2500
Avg Retail cost 700.00

2500 x .02 = 50 saved accounts

50 x 700 = 35000.00 additional dollars on your bottom line

Try one of our actual clients' returns

Active accounts 5500
Avg Retail cost 1000.00

5500 x .05 ( yes a 5% increase) = 275 saved accounts

275 x 1000 = 275000 WOW!

This is possible for you, if you start to change your focus today.

Good Luck