I’ve always believed that you should aim for a 100% customer retention rate. Please everyone at all costs.
The problem is that as you attract new, larger, more profitable clients, the difference between your top level clients and bottom level becomes much greater. Your resources become literally stretched and eventually, something has to give.
It is widely accepted that many businesses would benefit from losing the bottom 20% of their client base and replacing it at the top, on a regular basis. This can only happen if your customer retention rate is 80%.
Do you have an active Customer Removal Strategy? If not, you need to get one.
If you have a Marketing Strategy to get new clients in, you need a Customer Removal Strategy to get the old ones out.
It sounds harsh, but while ever you’re allocating resources to serve non-profitable clients, you are not allowing the spaces for the profitable ones to get in.
Tomorrow, I’ll tell you how to set one up.