T
R
U
S
T
M
O
T
I
V
A
T
I
O
N
C
O
N
F
I
D
E
N
C
E
S
E
R
V
I
C
E
U
N
D
E
R
S
T
A
N
D
I
N
G
L
O
Y
A
L
T
Y
H
A
P
P
I
N
E
S
S
P
A
R
T
N
E
R
S
H
I
P
S
U
P
P
O
R
T
S
A
T
I
S
F
A
C
T
I
O
N
CUSTOM ER
Retention Strategies
Course Objectives
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Explain What is Customer Retention
Explain What is Customer Loyalty
Describe the Drivers of Customer Loyalty
Describe the Various Customer Loyalty Breakers
Explain What is Customer Satisfaction
Explain Attrition and Silent Attrition
Describe the Various Customer Retention Strategies
Explain the Determinants of Customer Retention
Explain Methods and Tools for Customer Retention
Explain Principles of Retention Management
Explain What is Customer Lifetime Value (CLV)
Explain the Need of Relationship with Customers
Explain How to Use Strategic CRM for Retention
Explain the Myths of Customer Retention
List the Challenges of Customer Retention
Introduction
Hazel always uses ‘Pepsodent’
toothpaste, L’Oreal shampoo and
Revlon brand of cosmetics.
Let us look at a few brands
that she uses.
This is Hazel Watson.
Brands
Introduction
Now, she is happy with these
brands and so has continued
using them for several years.
She must have carefully considered
all her options and then decided to
go ahead with using these brands.
Now, think of the first time
when she decided to start
using these brands.
Introduction
Now, if all these three companies
were to achieve what they achieved
with Hazel, that is, a ‘happy and satisfied
customer’, it is very easy for these
companies to maintain sustained growth.
Hence, you can understand
that Hazel is a ‘happy and
satisfied’ customer of
Pepsodent, L’Oreal and
Revlon.
Introduction
This is where the concept of
‘customer retention’ and various
strategies related to it come into
the picture and are crucial to any
company’s success.
One of the key principles in sales is
that, it is better to keep an existing
customer happy and prevent him
from going to your competitor
brands rather than depending
solely on making new customers.
What is Customer Retention?
Customer retention is a strategic
process to retain existing
customers. It is difficult to exactly
define customer retention as it is
a variable process. A basic
definition could be ‘customer
retention is the process when
customers continue to buy
products and services within a
determined time period’.
However this definition is not
applicable for most of the high
end and low purchase frequency
products as each and every
product is not purchased by the
customer.
Customer Loyalty and Satisfaction
Loyalty is demonstrated by the actions of the customer. But it doesn’t
mean that the customer satisfaction level can measure his loyalty.
Customer loyalty is not customer satisfaction. Customer satisfaction is
the basic entry point for a good business to start with. A customer can
be very satisfied with the deal and still not be loyal. On the other hand,
a customer may not express satisfaction but wants to remain loyal to
the supplier due to some reasons which keeps him benefited from that
supplier. For the same degree of satisfaction, the loyalty level may also
be different for different suppliers.
Drivers of Customer Loyalty
It is very important for an organization to identify the factors and facets which
drive customer loyalty. These factors help the organization to manage customer
loyalty in a better and efficient way. Following are the drivers of customer loyalty:
Attitude
Product
and
Services
Let us look at each in detail.
Technology
Drivers of
Customer
Loyalty
Human
Resources
Supplier’s
Culture
What is Customer Satisfaction?
Customer satisfaction is the measure
of how the needs and responses are
collaborated and delivered to excel
customer expectation. It can only be
attained if the customer has an
overall good relationship with the
supplier. In today’s competitive
business marketplace, customer
satisfaction is an important
performance component and a basic
differentiator of business strategies.
Hence, the more is the customer
satisfaction; more is the business
and the bonding with customer.
What is Customer Satisfaction?
Customer satisfaction is a part of customer’s experience that measures a
supplier’s behavior on customer’s expectation. It also depends on how
efficiently it is managed and how promptly services are provided. This
satisfaction could be related to various business aspects like marketing,
product manufacturing, engineering, quality of products and services,
responses to customer’s problems and queries, completion of project, post
delivery services, complaint management etc.
What is Customer Satisfaction?
Customer satisfaction is the overall essence of the impression about the
supplier by the customers. This impression which a customer makes regarding
the supplier is the sum total of all the process he goes through, right from
communicating with the supplier before doing any purchase to post delivery
options and services and managing queries or complaints post delivery. This
helps the customer to form a strong opinion about the supplier which finally
results in satisfaction or dissatisfaction.
Customer’s perception on a supplier helps the customer choose among the
supplier on basis of money, value and how well the delivered products suit all
the requirements.
What is Customer Churn?
Roll your mouse over
the “Did you know?”
icon, to learn more.
•
‘Customer Churn’ is the act of
losing your customers due to
competitive pressure,
unhealthy relationships,
financial constraints, etc.
•
The average consumer service
company experiences
between 30% and 70%
customer churn annually.
Several researches have
proven that most companies
spend $10 to acquire a new
customer for $1 spent in
retention strategies.
Did You Know?
The following are some important facts to understand the relevance of
customer retention:
According to White House Office of
Consumer Affairs, a dissatisfied customer
will tell between 9-15 people about their
According to 1st Financial
experience and happy customers who get
Training Services, 96% of
their issue resolved tell about 4-6 people
unhappy customers don’t
about their experience
complain, however 91% of those
will simply leave and never come
back
According to a McKinsey
Report, 70% of buying
experiences are based on how
According to the Harvard
the customer feels they are
Business School,
being treated
increasing customer
retention rates by 5
percent increases profits
by 25 percent to 95
percent.
According to a research, 55%
of customers would pay extra
to guarantee a better service
Which Customers to Retain?
While formulating retention
strategies, it is crucial to identify
‘which customers you want to
retain?’ This is important because
all customers are not equal.
Answers to several questions such
as which customers to target, how
much to spend on saving them,
what is the most effective media
to use to communicate with them
and how best to serve them to
ensure that they remain loyal for
years to come can be driven by a
factor known as the ‘customer
lifetime value’.
Determinants of Customer Retention
3
Most customers prefer a unique and
different product. Identical products
normally decrease the probability of selling.
Uniqueness in products often increases the
demand of that particular product in the
global market. More importantly, the unique
products should also be suitable so that it
meets the different expectations of a wide
range of customers. Hence, uniqueness and
suitability of products helps in retaining
customers to a greater extent.
Customer Lifetime Value
The following is a formula that can be used to calculate the Customer Lifetime
Value (CLV):
• Where:
o (1+i) = Interests
o n = Number of Years
Need of Relationship with Customers
Building relationship with customers in
current market trends is the most important
aspect that an organization should
focus on for customer retention.
The following are some of the
substantial outcomes of building
a long-term relationship with
the customer:
Better Customer Perceptiveness
Myths about Customer Retention
Customer retention is a crucial factor for organizational success in business.
Many companies have misconceptions about customer retention in regard to
assessing customer satisfaction in order to enhance business. Following are the
most prominent myths about customer retention in the business world:
100 %
Customer
Retention
An organization should
endeavor a perfect 100 %
customer retention
Enhancing customer retention and
enhancing organizational profit is
equivalent
ManagementStudyGuide.com
This is a DEMO Course On – Customer Retention Strategies. The Complete Course
Consists of 161 Slides
100 Courses Added So far with more than 15,000 Slides +
New Courses Added Every Week.