Research commissioned by digital marketing agency GI Insight and YouGov reveals that 61% of small and medium enterprises (SMEs) do not know how much revenue they lost last year from lapsed customers.
According to the report, this is largely due to the fact that companies do not know how many customers they lost in the financial year 2016-17. Where they do, it is estimated that the median figure lost by SMEs was £100,000.
Failing to identify the number of lost customers has significant impact on brands in the hospitality sector, as a 5% increase in customer retention rates approximately equates to 25% increase in profit, as outlined in research undertaken by Bain & Company.
Andrew Adkins, marketing director of GI Insight said it was important for SMEs and challenger brands to equally prioritise retaining existing customers and farming new ones - rather than focusing singularly on growth hacking - and to copy the success models of the household name businesses they wish to displace.
He said: “Any SME in the hospitality sector wants to win new customers, but as our research shows they really need to focus more on retaining them. They should start by knowing how many they’re not keeping hold of. We believe that marketing should be simple, and it should work.”