Customer retention is a term used to describe the activity undertaken by an organization that sells product(s) or renders service in order to minimize customer defections. Okay for customer retention to be successful it begins with the very first contact that an outfit has with its customer and this continues throughout the whole lifetime of the relationship. The ability of a company to succeed in attracting as well as in retaining new clients is not something related to its products/services alone, but also heavily related to how existing customers are served as well as its reputation within the marketplace.
You see with customer retention you are not just giving your clients what they already expect, but what they don’t. In other words, you are wowing them to the extent that they become committed advocates of your brand. Therefore, building customer loyalty involves putting customer value instead of profit maximization at the core of one’s business strategy. Now the key element that differentiates such business from others in an environment that is competitive is the continuous delivery of a high level of customer service.
Businesses have come to the realization that good customer service is the backbone of their growth. And, customer service refers to the wide range of activities, which a firm together with its staff follows in order to bring about customer satisfaction. Now good customer service is what results into customer loyalty. Moreover, customer loyalty is the result of customer satisfaction. Now a customer is said to be satisfied when such person believes that he/she has received value of the product or service that is equal to or more than what such person is expecting.
High level of customer loyalty
It has been said that the strategies employed in attracting new customers don’t work to keep existing customers rather what should be done is to aim for enhancing customer relationship perception. It is for this reason that businesses are offering different incentives to keep their customers. This includes discounts, coupons, but more importantly customer loyalty programs as these programs are known to have a positive long-term effect on consumer behavior. Consequently, those who participate tend to overlook some of the company’s weaknesses since they believe they are receiving better services as well as good value for their money being spent.
In the light of this, then one can define high level of customer loyalty, which leads to high level of customer retention as a situation where the customers involved are so convinced about a brand and will be forever willing to represent this brand and patronize its products as well as services. Such people are not wooed by other brands at all since they believe the brand to which they are loyal to have more than what it takes to satisfy them and is constantly doing so.
Benefits of customer retention
No matter the tactics or strategies, which a company uses to improve profitability, it must pay attention to maintaining its present customer base. Now there are several benefits of doing so. This includes:
- The cost of customer retention being as much as twelve times lower than the cost used in attracting new customers.
- Conversion of new customers into loyal ones will take more time, effort plus money than what is required for existing customers.
- Also, for the revenue generated from one old customer to be earned many new customers will be required.
- Generally, loyal customers will use more and are less price sensitive compared to new customers.
- Loyal customers will often refer others, while defecting customers usually tell up to 10 or more people about their reasons for defecting.
About the guest author: Davis Miller is a guest post writer and a regular blogger. He has a very good knowledge of customer retention and customer satisfaction; also give online tips on that.
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