Customer Retention

Customer Loyalty :

Specific desire to continue a relationship with a service

provider.

Customer Retention :

Customer Retention is the activity that a selling

organisation undertakes in order to reduce customer
defections.
 Customer Retention is an art
 Who is profitable customer
 yields a revenue, stream that exceeds by an acceptable amount the company’s cost
stream for attracting, selling and servicing that customer
 Retaining a customer in a business is cost-effective than attracting new customers.
 Loyal customer not only increases the sale volume of business but also creates
new customers
 Customer Retention enjoys two fold benefits.
 First, it gives revenue to the business and
 Second, customer retention brings cost reduction
What is Customer Retention?

Before we go through the strategies for retaining customers,

let us first understand what actually is a customer retention?

‘Customer Retention’ is the rate with which we measure

how a company is taking care of its customers over a
duration. After all the business is for the customers and the
success can be measurable through the customer satisfaction
and retention.
Customer Retention Rate

 If you have a low retention rate, then you must

understand what is going wrong with your process.

 On the other hand, if you have a high retention rate, you

should make a strategy to maintain that rate.
The Customer Development Process
 Customer Economics
 The 3Rs framework - breaking down the customer value
management cycle into three stages:
 Right customers (acquiring right customers)
 Right relationship (developing strong relations with those
customers)
 Right retention (keeping valuable customers in the business)
 However, the economics of customer value also incorporate the
following facts about customer acquisition and retention:
 Acquisition of customers can cost five times more than retaining
current customers.
 A 5% reduction to the customer defection rate can increase profits
by 25% to 85%.
 The customer profit rate increases over the life of a retained
Customer Economics

• acquisition costs only occur at the beginning of a relationship

Acqu • So the longer the relationship, the lower is the amortised cost; account
isitio maintenance costs decline as a percentage of total costs
n
Cost

• costs of serving a new customer exceed those of serving a repeat customer

• repeat customers generate over twice as much gross income as new
Rete
customers.
ntion
Cost
 How to Retain the Customers?

It is difficult to retain the customer if any of you is not

paying attention to another.

 For retaining your customers, you should have an

exceptional user experience, connection &
communication with your customers and education.
Techniques to Retain Customers

4 techniques which will help you in retaining your

customers.

1. Find Out and Focus On Your Target Audience

2. Seek and Act on Customer Feedbacks
3. Boundless Improvement of User Experience
4. Apt Message after Sale
 Find Out & Focus on Target Audience

 The first step which needs to be focused before actually

planning the customer’s retention is that a business needs
to find out and focus on their target customers as well as
existing loyal customers. When you create the plan for
customer’s retention keeping in the mind your target
audience, it gives more profit or ROI than focusing on
your new or average customers.
Focus on Target Audience (Cont..)
 To identify your target customers, you can check the
metrics such as Purchase frequency, Customer Lifetime
value, Price sensitivity, Average order value etc.

 To increase the retention rate and conversion rate, you

also need to find out the annual rate of people leaving
your site or subscriptions or memberships.

 If you want to customize the retention process then you

have to track the purchase behavior of your customers.
What to Do?
 To enhance the conversion rate of your brand, you can
use the Net Promoter Score method. This will let you
know about people who like your products and services
(promoters), people who don’t like your products and
services (detractors) and people have neutral experience
or perspective (Passive) about you.

 This will help you find out the group of people on whom
you could focus more for retaining them on your website.
The Customer Loyalty Grid
Expected Un Expected

Zone of
Satisfaction Zone of Delight
Stated

Zone of Zone of
Unstated Indifference Loyalty
Seek and Act on Customer Feedbacks

 The companies who take the customer feedbacks and

reviews seriously, become successful as compared to the
customers who don’t take that into account. A customer
review not only help to get your company credibility but
it also helps to increase the conversion rate and build
trust.
Customer Retention Programmes
 Customer Retention
Programmes
• A customer has specifically •Provide excellent customer
signed up for a programme service
Cards relationship manager
Rewards
•touch points
Customer Special
Loyalty Customer
Programme Service

Encourage
Cross Selling
Develop a sense of Community
and Multi Cross selling refers to selling ia
community among customers building
Channel complementary product or service
Shoppers Stop dedicates the first two Usage in a specific transaction such as
days of sale for their loyal customer selling a printer to a customer, when
community he has decided to buy a computer
Linking of Customer Value to Customer
Loyalty
Customer Loyalty Customer
Value

Perceived
Satisfaction

 Two of the more effective means of generating customer loyalty are

 To delight customers
 To deliver superior value derived from excellent services and quality products
 Customer value is “the fundamental basis for all marketing activity”. It regulates “behavioral intentions
of loyalty toward the service provider as long as such relational exchanges provide superior value
 Key steps for customer loyalty and retention
 No business can get loyal customers without hard work and proper marketing
strategies. To gain loyal customers and to retain them with the business,
Following are some key points which lead to increase customer loyalty and
retention:
 Main objective of the top level management should be to add value for
customers, by providing product/service of best quality, with fare price, in
cyclic time and serve better than their competitors.
 Making long-term key strategies for customer loyalty and retention.
 Appointment of Chief Customer Officer (CCO) to deal with customer
related view points.
 Managers must spend at least 25% of their time with core customers.
 Main goal of managers should be to retain customers, which automatically
leads to achievement of sales target.