and relationship management because securing new customers requires more investment. Many companies in competing markets redirect or allocate large amounts of resources towards customer retention. In markets with increasing competition, attracting new customers may cost up to five times more than retaining current customers because direct or 'offensive' marketing requires much more to cause defection from competitors. However, it is suggested that because extensive classic marketing theories center on means of attracting customers and creating transactions rather than maintaining them, the predominant usage of direct marketing used in the past is now gradually being used more with relationship marketing as the latter's importance becomes more recognizable. Reichheld and Sasser (1990) claim that a 5% improvement in customer retention can cause an increase in profitability of between 25 and 85 percent in terms of net present value depending on the industry. However, Carrol and Reichheld dispute these calculations, claiming that they result from faulty cross-sectional analysis. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers while having engaged employees and engaged customers returns a revenue gain of 3.4 times the normal return. According to Buchanan and Gilles, the increased profitability associated with customer retention efforts occurs because of several factors once a relationship has been established with a customer: The cost of acquisition occurs only at the beginning of a relationship. The longer a relationship, the lower the amortised cost. Account maintenance costs decline as a percentage of total costs or as a percentage of revenue. Long-term customers tend to be less inclined to switch products and also tend to be less price-sensitive. This can result in stable unit sales volume and increases in dollar-sales volume. They also may provide free word-of-mouth promotions and referrals. Furthermore, they are more likely to purchase ancillary products and high-profit margin supplemental products. Customers who stay with a company tend to be satisfied with the relationship and are less likely to switch to competitors, increasing the difficulty for competitors to enter the market or gain market share. Regular customers tend to be less expensive to service because they are familiar with the process, require less 'education' and are consistent in their order placement. Increased customer retention and loyalty makes employees' jobs easier and more satisfying. In turn, happy employees increase customer satisfaction in a virtuous circle. The relationship ladder of customer loyalty groups types of