Know-How Exchange : Strategy

You're very wise to focus on customer retention. A dollar spent on retention will almost always go much farther than a dollar spent on acquisition.

Having said that, there's really no such thing as an all-encompassing customer retention rate for the general service industry. For example, a cable company would probably go out of business if its retention rate were 50%, and a funeral home would have to be very smart to get its retention rate above zero.

I think the thing to do is focus on your own company and look at the overall trend. Headed up? Down? Flat? Naturally, you should always be looking to make improvements here.

You might have some luck in getting this information from a trade group or a business publication (maybe someone has written an article on this subject for your industry and has a general feeling about the retention rate), and if you're at all friendly with your competitors, maybe you could just call and ask them, offering to share your information, too. (Or you could call someone out of your market if you're not a nationwide business, then you won't be a threat to them.)

If I had to pick, though, I'd say focusing only on your own number and working to increase it is the best use of your time. You might also want to run some financial models showing how valuable a bump in retention rate is to your bottom line. That should help free up some marketing dollars for exactly that cause.

Good luck!

Brad, when I hired a marketing expert to help us with some forecasting, the customer ATTRITION rate they projected was 5-10%.

I suppose it all depends on what kind of services you're selling. Can you tell us more?

- Shelley