A 5% drop in defection does not lead to 80%+ more profits

Some of the most popular modern marketing myths come from the writing of Frederick Reichheld. In particular a famous article with Earl Sasser where, on the very first page they write:

Companies can boost profits by almost 100% by retaining just 5% more of their customers.

This has been quoted extensively. Even academics, who should know better, quote it in textbooks and in articles in leading scholarly journals.

And yet it is a grossly (and rather obviously) misleading line.

To read the full article go to the University site – click here.



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