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What is Customer Retention?

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What is Customer Retention?
What is Customer Retention?

Today under the customer service module what we will talk about is customer retention. Well, friends haven’t you ever heard about this thing that nowadays it’s difficult to retain your customers meaning customers have so many choices and so many competitions all around that. It’s difficult to make your customers stay with you with your organization. Well, fear not we are here to guide you as to how to retain your customers. On the agenda today.

Table of Content

We will talk about what is customer retention value of your existing customers. Which is nothing but customer attrition how to tell. If you need to improve your customer retention programs. Development of a customer retention program for your organization. So let’s understand what exactly is customer retention. Well according to a definition it really means refers to the activities and actions. Companies and organizations take in order to reduce the number of customer defection.

Which is basically your customers moving away to other people. The goal of customer retention programs is to help customers retain as many customers as possible through customer loyalty and brand loyalty programs. It is an important fact to remember that customer retention begins with the first contact a customer has with a company and continues throughout the entire lifetime of the relationship.

Well simply put it means that you need to do as much as you can to retain your customers not just the first time. When they are in contact with your company but the entire lifetime. When they are with your company you need to keep doing things in order to retain them. One of the best ways to do it is through a loyalty program.

So why customer retention. Well, most of the companies traditionally spend more money on customer acquisition because they view it as a quick and effective way of increasing revenue. It is not always possible that you need to put in so much money every time in order to acquire new customers. Rather it is better and more effective if you are able to retain your old clients. Customer retention often is faster and on an average, it costs up to seven times less than customer acquisition and hence. It’s important to understand the statistics that it’s more costly to acquire a customer. Rather it’s much more cost effective in order to retain a customer.

Let’s understand the value of existing customers. Well, I do have something to show you over here. The value of a retaining customer is. It helps you to save on the acquisition cost. Because acquisition cost leads to more marketing, more PR, more public relations and more events for your company. What of mouth reference if you have given good service. Once you are likely to get more reference from them. It helps you to have a repeat business and it is a win-win situation that is what is the value of retaining an existing customer.

Well according to data and statistics 6 to 7 per cent number of times more costly to acquire a new customer than an existing one. It is 50% more amount of customer attrition rates could reach. If left dormant over a five year period in case you do not get back to those customers within five years. You are likely to have a 50% drop in those customers five points 95 percent.

What is the amount of increased profits that can come from boosting your customer retention rate as little as five percent. Well, my friends are certain statistics which has been researched by many many companies and hence these numbers are very essential for your customer retention.

Well, it cost five to ten times more to acquire a new customer as we have meant before in order than to retain an existing one. So retaining your customers really helps you to increase your billing. Hence try to hold on to your customers do not let them go over to your competitors. Because that will be a loss of revenue as a company. Let’s understand in a simple language churn means. When a customer leaves you meanings attrition rate of the customer.

So churn sometimes known as customer attrition is the opposite end of the spectrum that is how many customers don’t return to your company after making a purchase. So, for example, a customer has come and purchased a good or service from you and after that first time. He never comes back that is what is churn or attrition from the customer’s point of view.

Let’s understand churn with the help of a formula. So customer churn rate is equal to customers at the beginning of the month – customers at the end of the month divided by customers beginning of the month. When you get that number that is your customer churn rate. So I would really suggest that you do this for your company and organization and try to find out how many customers have actually left you.

Because if the number is bigger it’s not good for your organization. So try to keep the churn rate as less as possible. Friends let’s understand certain customer retention program now. What can an organization or a brand really do in order to get these customers to stay with you? So there are different programs for example record interviews those customers. Who has left try and get an interview from them by asking them? What made them leave or what made them exit that particular brand?

Get feedback from your current and your past customers. Feedback always helps because it helps you to improve yourself by focusing on those areas. Which need an improvement request ideas on forums. So there are different platforms. Wherein your request for certain ideas get happiness scores people. Who are really happy shopping with your brand for the product or the service. Try to get a score from them. Pirate your product or solution based on that particular feedback and have a lot of loyalty programs.

Now friends loyalty program is something which most of the companies all across the world are doing in order to retain their customers. Because when you make them give them rather loyalty programs. They are stuck to your company because you are offering them so many additional services. You’re offering them free purchases and discounts and sales and isn’t that. What a customer really really wants. Well development of customer retention program if you really want to retain your customers.

There are certain steps that you will have to take care of first is to implement a customer onboarding program. Customer onboarding is a process of getting a new customer to use your product or service in the simplest way possible in order to achieve their goals. So try to at least get a few new customers onboarding them making them try a product or service.

The second one is to create customer follow-up programs. Well according to a particular study 82% of companies agree that customer retention is cheaper than closing on a new customer. Well getting a new customer is definitely more expensive for a company and research proves that third is to identify risk customers. Many customers will stop doing business with you. Because they are not satisfied either with your product or service that you are providing them. These are your risk taker or risk customers. So you want to identify. Who they are fourth is follow up on customers.

Who haven’t brought for a certain period? If you feel that a customer has not shopped for your product or service for a long period of time. You need to understand and take notice. Why they haven’t got back to you? Or why they haven’t come back to you. If the period of you know of them not coming back to you is the longer period. So after their first purchase, the customer has a 27% chance of returning back to your score in case that hasn’t happened. You need to pick up a phone and call them. If it is winning back on your lost customers.

Well, when you try to win back a lost customer. You don’t have to be afraid to make mistakes the customer is already lost. The only other outcome is to win them back. Well, do not fear or worry. If you do not have your customers coming back to them. rather it is always good to win them back by making an effort to win them back.

Well, friends, I’m going to show you a very very interesting study or data. Which was collected by a lot of researchers on customer retention? Well, customer retention has about 52% highest importance with regards to other factors. Let’s see what the other factors are?

  • Customer acquisition is 45%
  • Product innovations 30% how many new products or creativity are you putting into your work in order to have a new product or service. That’s only 30%.
  • New merchandising strategies is 25%
  • Pricing and promotional strategies are 24% in terms of what are your different strategies. Your promotions your pricing your planning etc.
  • New sales channels are 19%. So whatever new way of marketing you’re doing in terms of channelling.
  • Technological advancements are 16% how good you are using technology.
  • Entering new markets is 11%

So, friends, this is a very quick show to you that customer retention absolutely tops the entire list of significant retailed revenue drivers for your brand or company. We’re friends I do hope you have understood this entire article on how to retain your customers. Please understand customer retention is always more economic for a company or a brand rather than going for acquiring or customers.

Keep reading more articles coming your way. Please do feel free to leave your comments and your feedback on this article. thank you so much for watching us tutorialspoint.com simply easy learning

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