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
Elaine K. Harris
2
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
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
Elaine K. Harris
3
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
Defection Rate:

The percentage of customers who leave a
business in one year.
Customer Service: A Practical Approach, 5e
Elaine K. Harris
4
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
Customer Lifetime Value:

The net present value of the profits a customer
generates over the average customer life.
Customer Service: A Practical Approach, 5e
Elaine K. Harris
5
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
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
Elaine K. Harris
6
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
Guidelines for establishing a customer
retention program:
1.
2.
3.
4.
5.
Examine who your customers are and what specific
needs they have.
Identify specific objectives to be realized by the
program.
Create a manageable program of customer retention.
Create a culture that stimulates customer interest.
Determine a timetable for evaluation.
Customer Service: A Practical Approach, 5e
Elaine K. Harris
7
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
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
Elaine K. Harris
8
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.
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
Elaine K. Harris
9
© 2010 Pearson Higher Education,
Upper Saddle River, NJ 07458. • All Rights Reserved.