On method: the retention statistic

Every volume of Principles of Practice ends by naming the numbers its field repeats most often and explaining why the book does not use them. Revenue operations has two.

The first: acquiring a new customer costs five times more than retaining an existing one. It appears everywhere and it is sourced to almost nothing. Where a source exists it is a specific study, in a specific industry, at a specific time, and the multiple varies enormously by business model. The number is presented as a constant and is not one.

The second: a five percent increase in retention increases profits by twenty five to ninety five percent. This one does trace to real work, on a genuine mechanism, in the early nineteen nineties. What travels is a range so wide it cannot guide any decision, stripped of the model that produced it and of the conditions under which it holds.

Both are directionally reasonable. Retention usually is cheaper than acquisition and usually is high leverage. Directionally reasonable is exactly what makes an unsourced number dangerous, because nobody feels the need to check something that sounds right.

This volume argues its retention case from your own arithmetic instead: the mix table, cost to serve by position, and the manual test on your own accounts. Those produce a number that is true about your business rather than about somebody's business in nineteen ninety.

The four questions from Volume I apply unchanged. Who produced it and what were they selling. What was the sample and of what population. What exactly was measured, in units. Has anyone independent reproduced it.