0:00 → 0:04
Let's take a look at keeping customers for the web/mobile channel.
0:04 → 0:09
Web/mobile works almost exactly like physical channels, keeping customers.
0:09 → 0:21
It's exactly the same idea. We might want to offer loyalty programs, contests and events, blogs, RSS and email, or social media - all designed to engage customers.
0:21 → 0:25
Why do you want to think about keeping customers?
0:25 → 0:31
Customers are a lot more expensive to acquire over here than they are to keep.
0:31 → 0:37
And the key thing that you want to worry about is churn, or sometimes called customer attrition.
0:37 → 0:43
And here is why - so imagine if you are losing 5% of your customers a month,
0:43 → 0:48
well, in 3 years, you'll only have about 16% of them left.
0:48 → 0:52
But imagine if you can reduce churn to 1%.
0:52 → 0:55
So, that every month only 1% of these customers left.
0:55 → 1:02
After 36 months with 1% attrition, you'd have 70% of your customers left.
1:02 → 1:08
Just think about it, with 5% attrition, your average customers sticks around for about 20 months,
1:08 → 1:12
but with 1% attrition, they stick around for 100 months.
1:12 → 1:19
You get 5 times more revenue from the same customers by just working on keeping these customers around.
1:19 → 1:26
Now, by the way ,in reality, financial people discount the cash flows from customers later in this life cycle.
1:26 → 1:35
The actual value you get is somewhat less, how much less depends on your industry and cost of capital, but we’ll leave that for the accountants in a more detailed class.