Call it what you want. Since these sales concepts have been around for decades, it might seem odd to argue for this calculation.
Companies instinctively know that customers are important.
And they are happy to capture profits from a continuous cycle of new customers. Customer defection runs at 10 to 30 percent a year or more. Using the credit card industry as an example, if a company could increase its retention rate 5 percent, total lifetime profits from a customer would rise 75 percent on average, the book indicated. Web technology gives companies an unprecedented opportunity to learn a great deal about their customers, including how often they might be buying. Historically, that information hasn't been widely or easily available.