p




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— p
 
 is the activity that a selling
organization undertakes in order to reduce customer
defections.
— ¦uccessful customer retention starts with the first contact an
organization has with a customer and continues throughout
the entire lifetime of a relationship
— pustomer retention is more than giving the customer what
they expect, it·s about exceeding their expectations so that
they become loyal advocates for the brand.
G
p
 
 

pustomer retention and satisfaction drive profits. It's far

less expensive to cultivate the existing customer base and sell
more services to them than it is to seek new, single-
transaction customers.
G


 
 
 
— £
 TERM £ £ p¦T MER¦
— uy more per year
— uy more often
— re less price sensitive
— re less costly to serve
— re more loyal
— Have a higher lifetime value
£







— Transient individuals
— oung people rather than older people
— ¦ingle people rather than married people
— Renters rather than home owners
— People who respond to low-bill discount offers
— People who respond to temporary sales
-

 
  

— Put yourself in customer shoes

— The customer retention process begins with the first contact

before they are even a customer.
— pross sales build retention
- 

p   
— Revenues are enhanced due to increased sales and costs are
lowered due to lesser generation and marketing costs of such
revenues.
— ¦avings on customer acquisition or replacement costs
—  guarantee of base profits as existing customers are likely to
have a minimum spend per period
— rowth in per customer revenue over time
—  reduction in relative operating costs as firms can spread the
cost over many more customers and over a longer period of
time.
— Free of charge referrals of new customers from existing
customers
— Price premiums as current customers usually do not wait for
promotions or price reductions before they make their
purchases
 pp- 

— Increased customer trust

— pommitment

— pooperation
‰



— Price defectors switch to low priced competitor
— Product defectors superior product offered by a competitor
— ¦ervice defectors who leave due to poor service
— Technological defectors  switch to products offered by
companies outside the industry
— rganisatoinal defectors internal or external politics
 






— uefine the market structure
— ¦egment the customer base and determine the segment value
— Identify the segment needs and
— Implement a segmented service strategy
 


 

— ¦trategic bundling is another way of erecting a barrier against
defections that can lead to enhanced customer retention. 
bundle is a group of products or services offered as a single
cost saving and convenient package.  customer who opts for
a bundle will not switch to a competitor even if he is offered
a better deal on a single item of the bund
 


 

— sage analysis is a method that can be effectively used to help in
customer retention.
— ¦egmenting markets by consumption can provide valuable insights
into the mix of customers.
— Heavy users are more valuable than the medium or light ones and
appropriate marketing strategies have to be devised to retain
them.
— ¦imilarly in the business context, we find the Pareto Principle or
the 80/20 rule in operation.
— Key accounts that comprise about 20 per cent of the business
customers are responsible for about 80 per cent of the sales
generated. ¦uch heavy and key users are prone to poaching by
competitors.
 


 

— Hence it is important to concentrate advertising, promotion,
sales and communication efforts on this segment. Medium
customers should be targeted with revenue enhancement
strategies through phone calls and e-mails.
 


 

— isibility pustomer should know where to complain
— ccessibility pustomer should know how to complain.
— Responsiveness pomplaints need to be dealt quickly. The
quicker the complaints are dealt with, the higher the
customer satisfaction
 


 

— pustomer focussed apporoach  service provider who
adopts customer-focussed approach, invites complaints and
indicates commitment for resolving complaints by its words
and actions in all fairness.
— ccountability  ¦ome in the organisation has to take
responsibility for complaint handling.
— pontinous improvement £ooking at the root causes and
fixing them.
 


 

— Membership cards and programs that entitle your customers
to special offers, discounts, or preferential treatment.
— Welcome, acknowledgement, sales recognition, thank you
statements
— fter sales satisfaction and complaint inquiries and surveys.
— Event oriented communications in which the customer is
genuinely interested.
— Enhanced and empowered customer, after sales, and
technical support.
 
 





 
 

 
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— £ist options or record open-ended comments
— The customer retention rate refers to the number of
customers lost over a period of time.

— It is normally calculated by the percentage of lost customers

versus existing customers over a quarterly or annual period,
without tallying new customer acquisitions.
—  
   is calculated by following one group of people and seeing how many are left at the end of a
given time. Most companies use 1 year periods of time, therefore the easiest equation is #$%

  , or
#$% 

  




—
otice this doesn't take into account new clients you bring in over the year. It can't. That number is your
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  . If you were to calculate in your new clients, it would skew your data.
— Retention Rate, by definition, means the rate at which you are keeping a customer. If you had 100 customers and
at the end of a year only 82 were left, you'd have an 82% Retention Rate R and 82% chance of keeping a new
customer 1 year.
— ¦o, in following our 9 year customer tenure from above, let's say we started with 100 customers 9 years ago, some
left during that first year, leaving 82 at the beginning of the second year....etc.
— (r) is calculated by isolating a group of customers for a given time period (t) (in this case 9 years) and taking the
number of clients that left by the end of that time period, and dividing by the sum total number of clients at the
end of each year for those 9 years. D&
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