INTRODUCTION Customer retention is the activity that a selling organization undertakes in order to reduce customer defections.

Successful than not the delivery of a consistently high standard of customer service. Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged

customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. A companys ability to attract and retain new customers, is not only related to its product or services, but

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 norm. Keep the customers you have by providing a great customer experience Both customer retention and customer

strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace. Customer retention is more than giving the customer what they expect; its about exceeding their expectations so that they become loyal advocates for your brand. Creating customer loyalty puts customer value rather than maximizing profits

loyalty embody repeated behavior, where loyalty reflects relationship development and retention reflects relationship

continuation. Customer retention is an essential part the customer relationship, and customer experience management must take this into account.

and shareholder value at

the center of

business strategy. The key differentiator in a competitive environment is more often

Customer retention highly depends on attrition and silent attrition rates. Attrition is the process when customers no longer want to use product and services provided by the supplier and breaks the relationship bond by informing the supplier that he will be no more a customer. Most of the defecting customers dont even intimate the supplier that they are defecting. This process is called silent attrition where the customer stops purchasing the product and services and divert to other suppliers without even informing organization them. should During prepare attrition, serious

find no time to implement the corrective measures to try retaining that particular customer or even determine if the customer can be retained or not. Customer retention does not make sure that the customer is loyal. For example, a brokerage firm has both traditional trading platform and online trading platform. A customer has his trading account in

traditional platform but after some time he feels to switch to online trading platform. Now in this situation, the customer is not considered to be loyal to the given services, but the customer is said to be retained by the same organization. Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this is only possible when there is a quality relationship between customer and supplier. Usually a customer is tended towards sticking to a particular brand or product as

customer retaining strategies to save the customer to defect. It is often seen that if these corrective measures are implemented successfully to save defection then retention level increases to a much higher level as compared to a normal retention process. Silent attrition causes the real damage to the organizations because they do not even know when the customer defected. They

far as his basic needs are continued to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business.

Franklins age-old idiom that a bird in the hand is worth two in the bush, heres a look at five customer retention tips for

entrepreneurs. Never Underestimate the Value of

Retention

5 TIPS FOR ENTREPRENEUR FOR CUSTOMER RETENTION

When it comes to growing their startups, many entrepreneurs are so focused on gaining new clients and customers that they fail to effectively address the need to retain those they already have. This is

For those who feel that customer retention plays a relatively minor role in helping a company grow a healthy bottom line, here are a few statistics you might be interested in. According to Bain and Co., a 5% increase in customer retention can increase a companys profitability by 75%. And if those numbers dont impress you, Gartner Group statistics tell us that 80% of your companys future revenue will come from just 20% of your existing customers. Still not sold on customer retention? One final statistic provided by Lee Resource Inc. should give you plenty to think about: Attracting new customers will cost your company 5 times more than keeping an existing customer.

counterproductive considering that its far easier (about 50% easier according to Marketing Metrics) to sell to existing customers than to brand new prospects. All gung-ho and fresh out of the gate, startup entrepreneurs often find it more exciting to focus on customer addition, but ignoring customer attrition could eventually spell their downfall. In the spirit of Ben

Implement

an

Effective

Customer

Avoid Misreading Your Customers Misunderstanding how customers think is a proven way to keep retention rates heading south. And its not just a problem with startups. According to statistics provided by Bain and Co. in the Harvard Management Update, 80% of companies surveyed said that they offer superior customer service, but only 8% of their customers agreed with them. Ouch. IBMs customer relationship study of 2011 sheds more light on just how wrong companies can be about what their customers are thinking. When a number of companies were surveyed as to the reasons they thought their customers followed them on social sites, a majority of companies listed discounts and purchases among the least important reasons. But when the customers themselves were surveyed, they listed discounts and purchases as the major reasons for following a company on a social site. To avoid misreading customers,

Retention Program Many entrepreneurs believe that if they have a great product or service and provide an outstanding customer experience, customer retention will naturally follow. And if this is your startup philosophy you would be right but only for a while. Customers dont owe you their loyalty. You have to earn it continually. Having an effective customer retention program in place gives you the ability to identify, track, and custom promote to those customers who are most likely to become loyal, long-term sources of revenue. For service oriented businesses a customer retention program from early on may not be necessary, as the quality of the service and support provided will determine the rate of retention. However, product driven businesses, which depend heavily upon same customer sales, will find customer retention programs invaluable.

companies need to focus more on actual

customer behavior, not on the predicted behavior of a certain demographic. This is where web-analytics comes in, as it provides data that shows you a customers past and present behavior, thereby allowing you to better predict their future behavior and strategize accordingly. Engage Customers Through Social Media Socializing with your customers can build retention if you do it correctly. The key is to dial down the corporate presence and give your customers a voice and a forum to connect with other customers, and then let them build the traffic. As you build your Facebook fans and twitter followers, stay engaged with them and establish alerts to keep you constantly informed and able to immediately comment on whatever is being said (both good and bad) about your company. As you identify those customers (followers) who are the most loyal, send them personalized thank you emails. Including incentives and coupon codes that

they know are meant just for them. It will make them feel even more important and appreciated. You always want to take care of your social media savvy customers, as they can either be your most powerful advocates or your biggest PR nightmares. Run Relevant Promotions What was that statistic again? Oh yeah, 80% of your future revenue will come from 20% of your current customers. Promotions can be a very effective way of retaining customers by keeping them actively engaged with your brand. The key is to run relevant pander-free promotions that reward

customers, make them feel good about doing business with your company, and encourage them to do more of the same. Loyalty programs are a good way to encourage and reward repeat business. Special discounts can also be effective, especially when they are tailored to those customers whose behaviors indicate signs of possible

defection. On a more personal note,

promotions such as sending promotional gifts, birthday cards, or staying in touch over the holidays with business Christmas cards are additional ways to express appreciation and potentially increase customer retention.

Increase in competition relative parity Rising costs of marketing increase in the cost of

advertising When its all said and done, being passive about customer retention only leads to distribution greater attrition. Companies that play an active part in communicating with distance marketing Customers have changed more informed increasingly skeptical loss of share of voice

Changes within the channels of

customers to keep them engaged and better meet their needs and expectations, are well on their way to achieving the prime objective of any customer retention

program; greater customer loyalty. IMPORTANCE Markets are stagnant decrease in population growth

BENEFITS
GNP growth increasing at a decreasing rate Profits derived from sales

 Reducing defections by 5% can boost profits 25% to 85% Profits from reduced operation costs It is 3 to 5 times cheaper to keep a customer than to recruit a new one Profits from referrals

Properly install products and train customers

Be there when you are needed the most

Provide discretionary effort

CUSTOMER TACTICS

RETENTION

Maintain the proper perspective Build trusting relationships Protect confidential information Tell customers the truth Provide full information (pros and cons)

Be

dependable,

courteous,

and

considerate Be actively involved in community affairs Monitor the service delivery process