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Customer
Retention Accounting Measures
Typically, a firm relies on sales and profit
figures to assess its current financial health. But such measures
alone create an incomplete picture, because they do not provide
insight into the source of those profits. For many "old-economy"
firms, repeat customers are a key source of profits. It is more
difficult to make such a statement about many "new-economy"
businesses. To help firms begin to understand the source of
their revenues and profits it is important that they have an
accurate assessment of their customer retention rates as well
as their ratio of lost to new customers. |
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