Customer Service:

A Practical Approach, 5th ed.

By
Elaine K. Harris
Chapter 10:
Customer Retention and
Measurement of Satisfaction
 Customer Retention:

 The continuous attempt to satisfy and keep

current customers actively involved in
conducting business.

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
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 Churn (or churn rate):

 The number of customers who leave a business

in a year’s time divided by the number of new
customers in the same period.

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
3
 Defection Rate:

 The percentage of customers who leave a

business in one year.

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
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 Customer Lifetime Value:

 The net present value of the profits a customer

generates over the average customer life.

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
5
 Determining the need for customer retention
program
 Is customer retention your primary management objective?
 Is customer satisfaction measured and assessed regularly?
 Is there a constant effort to enhance customer satisfaction?
 Do you measure quality standards and communicate results with
your employees?
 Do you train and retrain your customer service providers?
 Do you have employee turnover problems?
 How much do you spend to keep current customers?
 What is your current cost for acquiring a customer?
 What is your average annual customer dollar value.
 What is your current customer defection rate?
 How do you get lost customers back?
 Do you constantly deliver what you promise to your customers?

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
6
 Guidelines for establishing a customer
retention program:
1. Examine who your customers are and what specific
needs they have.
2. Identify specific objectives to be realized by the
program.
3. Create a manageable program of customer retention.
4. Create a culture that stimulates customer interest.
5. Determine a timetable for evaluation.

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
7
 Sources of Information to Measure
Customer Satisfaction
 Informal surveys
 Comment cards
 Verbal comments
 Historical data (point of sale)
 Sales
 Corporate generated surveys
 Discussions with internal customers
 Focus groups
 Toll-free phone numbers
 Customer intelligence information

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
8
 What measurement of satisfaction means to your
business:

 Customer relationships are deepened

 Customers know that we are interested in them
and their wants
 Improved product and service offerings
 Customer retention

Customer Service: A Practical Approach, 5e © 2010 Pearson Higher Education,

Elaine K. Harris Upper Saddle River, NJ 07458. • All Rights Reserved.
9