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Winning and Retaining Customers

Customer Retention

Driving Profits Through Giving Customers Lots of Reasons to Stay

by Vadim Kotelnikov, Founder, Ten3 Business e-Coach, 1000ventures.com

"Being good enough, is not good enough - give customers a reason to be faithful."  - Graham Roberts-Phelps

 

Benefits of Customer Retention: Statistics1

  1. Acquiring new customers can cost five times more than satisfying and retaining current customers

  2. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%

  3. The average company loses 10% of its customers each year

  4. A 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry

  5. The customer profitability rate tends to increase over the life of a retained customer

The Things that Customers Want4

Customers will usually come back if:

  • Your keep your promises

  • You are willing to help

  • You inspire confidence

  • Your treat customers as individuals

  • You make it easy for customers to do business with you

  • All the physical aspects of your product or service give a favorable impression

Related Chapters of the Business e-Coach:

Customer Satisfaction

Customer Partnership

Service-Profit Chain

Customer's Perspective of Quality

Dealing with Unfair Clients

Why Customer Retention?

If you don't give your customers some good reasons to stay, your competitors will give them a reason to leave. Customer retention and satisfaction drive profits. Most surveys across industries show that keeping one existing customer is five to seven times more profitable than attracting one new one.2

Getting Loyal Customers

Delighted and loyal customers will return for follow-on business without considering alternatives of comparing the competition. Though, there is a number of factors that influence customers' decisions to remain loyal, true loyalty is based on your company's continuous delivery of superior value. Customer loyalty is a major contributor to sustainable profit growth - "and to win customer loyalty, the business must first satisfy the customer repeatedly."5...More

Partnering with Customers

Customer connection comes from involving customers, partnering with them. Partnering with customers represents your firm's "capacity to anticipate what customers need even before they know they need it."6...More

Measuring the Success of Your Customer Retention Strategy

Customer attrition - the number of customer who did not renew their relationship in any one trading period, expressed as a percentage of the number of customers at the start of the month - is the key indicator in measuring the success of your retention and customer service program.

 

Bibliography:

  1. "Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy, 2003

  2. "Companies Don't Succeed - People Do!", Graham Roberts-Phelps, 2003

  3. "Customer Intimacy", Fred Wiersema, 1996

  4. "Customer Retention in a Week", Jane Smith, 2000

  5. "Extreme Management", Mark Stevens, 2001

  6. "Results-Based Leadership", Dave Ulrich, Jack Zenger, and Norm Smallwood, 1999

Founder - Vadim Kotelnikov. © Copyright by Ten3 East-West.  | Copyright | Glossary | Links | Site Map |

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