The Acme Widget Co. needed to increase revenue and profits, so they undertook an initiative to attract new customers: They launched a new advertising campaign and offered special deals to first-time buyers. They were initially delighted to see a significant and immediate increase in new customers. Their joy was short lived, however, as they saw revenue and profits actually decline.

The Acme Widget Co. made a classic business blunder. As new customers came in the front door, existing customers were leaving in greater numbers through the back door. They had violated one of the most important rules of business: Never take your customers for granted.

Even a small reduction in customer defections can significantly increase profits. Because your fixed costs don’t change much regardless of how many customers you have, the retention of existing customers is vitally important in maximizing profit. Creating and strengthening customer loyalty must be a top priority of any business if it is to grow and prosper.

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