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The Leaky Bucket Theory
The leaky bucket theory

Customer retention is one of the key concepts in relationship marketing. Most companies concentrate on recruiting new customers to replace customers who move on, rather than seeking to retain customers. Andrew Ehrenberg coined the phrase ‘leaky bucket’ to describe this syndrome: in effect, firms are putting customers into a leaky bucket, and instead of preventing them from leaking away through the bottom of the bucket, the firm keeps topping up the bucket with new customers (Ehrenberg, 1988).

Figure 1.4 The leaky bucket

A study performed by the Cumberland Bank (Murphy, 2001) in the United States showed that the ...

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