Winning in the Retention Economy:
The Experts Agree
In these volatile times, marketers are increasingly emphasizing customer growth and retention versus acquisition. Of course new customers are also important, but balancing resource commitment is crucial.
Just what are business and academic experts saying about retention versus acquisition?
Increasing customer retention by just 5% can increase profits by as much as 95%, according to Bain & Company as quoted by Ryan Dohrn in Forbes, March 4, 2026.
In January, leading Fintech player Stripe said, Customer retention is one of the strongest predictors of long-term business growth.
Reinforcing what most of us know, a Penn State Extension paper published in December 2025: A general rule of thumb is that it costs a business five times more to acquire a new customer than it does to retain a current one.
And finally, another paper from Bain reports: 53 per cent of marketing budgets is now devoted to existing customers. If this is true, then the acquisition of customers is becoming less of a goal than the retention of them.
The concept of Net Revenue Retention, as articulated by Elie Ofek, Barak Libai and Eitan Muller at Harvard Business School, is rapidly becoming a key performance indicator. The widely-accepted formula for calculating NRR is:
NRR = (Starting RR + Expansion RR – Contraction RR – Churn RR) / Starting RR × 100
As we noted recently, this perspective has become central to our practice.
But you know us; we may be geeks, but we’re practical geeks.
So we have gone beyond the concept and the formula to develop a new framework built around three critical dimensions of retention:
Value – what are customers worth, and at what cost to serve?
Velocity – How often do they come back, and how fast? Is velocity increasing, or decreasing?
Durability – How deep does the relationship go, and for how long?
We’ve created a new approach that requires fewer data inputs than ever, and quickly delivers actionable outputs with greater granularity than previous approaches. Our Retention Audit and Model will help pinpoint those customer segments where marketing investment will yield the most dramatic results in customer retention, growth, and lifetime value.
And we can deliver the Audit and Model as a discrete project, requiring no broader commitment to our consulting services. Ours is an efficient, action-biased approach.
Of course, we’re always available to provide greater support if needed in strategic planning, program design, development, optimization, and support. Our emphasis is on delivering actionable insights for swift implementation, to drive the greatest impact for your business.
What are your thoughts on how to win in the retention economy?