Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business, or to non-use entirely.
Selling organizations generally attempt to reduce customer defections. Customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship and successful retention efforts take this entire lifecycle into account. A company's ability to attract and retain new customers is related not only to its product or services, but also to the way it services its existing customers, the value the customers actually generate as a result of utilizing the solutions, and the reputation it creates within and across the marketplace.
Successful customer retention involves more than giving the customer what they expect. Generating loyal advocates of the brand might mean exceeding customer expectations. Creating customer loyalty puts 'customer value rather than maximizing profits and shareholder value at the center of business strategy'. Furthermore, in the emerging world of Customer Success Retention is a major objective.
Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1. The measurement of customer retention should distinguish between behavioral intentions and actual customer behaviors. The use of behavioral intentions as an indicator of customer retention is based on the premise that intentions are a strong predictor of future behaviors, such that customers who express a stronger repurchase intention toward a brand or firm will also exhibit stronger corresponding behaviors.
Customer repurchase and retention behaviors can be measured in a variety of different ways which are enumerated in several award-winning articles published in the marketing discipline. The different studies that also involve different metrics to measure customer repurchase intention and actual repurchase behaviors are summarized in a series of review papers such as Keiningham and colleagues ,  Gupta and Zeithaml ,  and Morgan and Rego In terms of measurement, the intention measures can typically be obtained using scale-items embedded in a customer survey.
This requires that the firm should have a strong customer information management department that can capture all the relevant metrics that may be needed for analysis. In a typical firm, these may come from a diverse set of departments such as accounting, sales, marketing, finance, logistics, and other customer research.
Customer retention is an outcome that is the result of several different antecedents as described below. Customer lifetime value enables an organization to calculate the net present value of the profit an organization will realize on a customer over a given period of time.
The easiest way to grow your customers is not to lose them. The average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships. In some industries this leakage is as high as 80 percent. The cost, in either case, is staggering, but few businesses truly understand the implications. Imagine two businesses, one that retains 90 percent of its customers, the other retaining 80 percent. If both add new customers at the rate of 20 percent per year, the first will have a 10 percent net growth in customers per year, while the other will have none.
Over seven years, the first firm will virtually double, while the second will have no real growth. Everything else being equal, that percent advantage in customer retention will result in a doubling of customers every seven years without doing anything else.
The consequences of customer retention also compound over time, and in sometimes unexpected ways. Even a tiny change in customer retention can cascade through a business system and multiply over time.
Marketing Wizdom can introduce you to a number of simple customer retention strategies that will cost you little or nothing to implement. Behind each technique listed here there is an in-depth step-by-step process that will increase your customer retention significantly once implemented, and will have a massive impact on your business. Virtually every business loses some customers, but few ever measure or recognise how many of their customers become inactive.
Most businesses, ironically, invest an enormous amount of time, effort and expense building that initial customer relationship. Then they let that relationship go unattended, in some cases even losing interest as soon as the sale been made, or even worse, they abandon the customer as soon as an easily remedied problem occurs, only to have to spend another small fortune to replace that customer. The easiest way to grow your business is not to lose your customers. So many people do an excellent job of making the initial sale, then drop the ball and get complacent, ignoring the customer, while they chase more business.
Reactivating customers who already know you and your product is one of the easiest, quickest ways to increase your revenues. Avoid losing your customers by building relationships and keeping in touch using a rolling calendar of communications.
People not only respond to this positively, they really appreciate it because they feel valued and important. The never-ending pursuit of excellence to keep customers so satisfied that they tell others how well they were treated when doing business with you.
Moving the product or service you deliver into the realm of the extraordinary by delivering higher than expected levels of service to each and every customer.
Extraordinary service builds fortunes in repeat customers, whereas poor service will drive your customers to your competition. A powerful system that improves the interpersonal skills of your team and changes the spirit of your organisation.
Aug 16, · Real-World Education for Modern Marketers Join Over , Marketing Professionals. Start here! Topics» Articles» Customer Retention. Five Content-Led Marketing Campaigns That Drive ResultsChris Cano. Promoting too many sales and discounts can devalue your brand and hurt your bottom line in the long run. Instead, use content to build.
The Best Articles on Customer Retention According to a survey by Lee Resources, 91% of unhappy customers will not willingly do business with you again. Do you have customers come back and buy from you a second, third, or even fourth time?
Jan 21, · Customer retention has traditionally ranked low as a business priority: as recently as , marketers ranked “driving sales” as their highest concern while “engaging customers” and. The latest news, videos, and discussion topics on Customer Retention.
What is Customer Retention? Definition and Metrics – A Definition of Customer Retention Customer retention refers to the activities and actions companies and organizations take to reduce the number of customer defections. Looking for even more information on customer retention? Check out these articles and resources: Top Customer. 20 Customer Retention Strategies The easiest way to grow your customers is not to lose them The average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships.