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Essay / Research Paper Abstract
: An 8 page analysis of Cannie's book on how to 'mine' the lost riches represented by customers who defect to a competitor. Cannie asserts that most US companies are unaware of how many of their customers go elsewhere over the course of a year. Additionally, she argues that most firms are also unaware of what these defections generally cost in the way of lost sales and reduced annual revenue. Cannie's premise is that these losses are significant and her arguments are most persuasive. No additional sources cited.
Page Count:
8 pages (~225 words per page)
File: D0_90cannie.rtf
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Unformatted sample text from the term paper:
she argues that most firms are also unaware of what these defections generally cost in the way of lost sales and reduced annual revenue. Cannies premise is that these losses
are significant and her arguments are most persuasive. For example, Cannie states that the typical US company loses 20% of its customer base every year. The dollar value of this
loss, of course, varies from one company to the next; however, Cannie uses the example of a supermarket chain that has estimated the dollar value of a customer at $5,000
in annual gross sales (9). Considering that the average store has 3,000 regular customers, if a supermarket loses 20% of its customer base per year, or 600 customers, this equals
a loss of $3 million on an annual basis (Cannie 9). Cannies main premise and rationale for this book is the belief that loyal customers are "gold mines" for
the companies that possess their trust. She asserts that this is true because statistics prove that those customers "who keep patronizing you become more profitable for you each year" (Cannie
12). This is true, in part, because the companys average costs in servicing these accounts goes down as time goes by. Additionally, statistics also show that customers tend to buy
more from companies that they have patronized for a long time (12). The lifetime value of a customer For the skeptical, Cannie recommends determining the "Lifetime Value of a
Customer" (LVC) in order to ascertain the potential profit inherent in keeping more of a companys customer base. Cannie seems certain that those companies who determine their LVC will realize
that taking care of customers is an investment?not just an expense. She provides a worksheet for making this assessment. The calculations Cannie shows are not difficult and the potential benefits
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