Customer Retention Strategies

Many customer retention strategies have been formulated, applied, and reviewed to get that much coveted high customer retention rate. What exactly is customer retention? The words themselves are self-explanatory. Customer retention is what a company does in order keep customers coming back. Customer retention rate is the number of clients that a company has lost in a predefined time span. This is calculated by existing customers times the rate of customers lost in a certain period, be it annual or quarterly, without including the newly acquired customers.

The thing is, many companies struggle over retaining customers, trying to find the best customer retention strategies to keep their sales up. Customer retention ideas are thought of, customer retention programs are made, customer relationship tips are read, but still it remains the same. They spend millions of dollars in new technologies, exerting much effort and labor in measuring the return of investment in those expenditures. The enigma stands, the solutions are brought in, but still the problem remains.

Out of all these efforts, there is one thing that seems so obvious and may just be the answer to this entire hullabaloo. And that is - doing a good job.

Doesn’t that ring a bell? When a company and its employees do a good job, then everything else follows. There will be good service, good products, and naturally, customers will see and feel this, and will ultimately, keep coming back.

Is the answer really that simple?

Well, maybe not. First of all, we have to know what defines a “good job.” For many companies, a good job varies according to the customers wants and needs. Companies spend thousands of dollars and hundreds of man hours trying to implement a customer tracking system that will tell them about their companies. So this is what companies should do; use the data available to define what a good job in their company is. The marketing arm of each company would be perfect for filtering through the customer tracking data to define what a "good job" consists of.

For example, what is good sales activity? What would make customers feel good when they get those calls from sales representatives? People from marketing would know how to answer that because they know the market place. What about the product? What makes an overall good product? What makes good customer service? A service which people can identify as reliable, consistent, accommodating? What is good financial management? Which investments should companies make and avoid? Asking yourself these questions is really what customer relationship management (CRM) is all about. Make sure that your company has asked itself these questions and that it has considering the CRM implementation process to resolve any areas of concern (areas where the customers are not likely satisfied).

The marketing arm would know how to answer all these questions simply because they know the market. This of course doesn’t mean that marketing would be the one to tell each department what they should and should not do. This only means that we must constantly reach out to the market for the purpose of coming back with detailed analysis of what exactly customers want. From each contact with the customer, marketing would have brought back useful information in, which different departments and organizations can use for their cost analysis, work requirements and feasibility studies. All of this is meant so they can do what they can to satisfy the needs of the market.

Once they answer that need, and customers see it. Then yes. They are doing a good job.

Now what other things can companies watch out for to do a good job? Why don’t we take a look at those customer retention strategies? One of them is to communicate with customers to build loyalty. This doesn’t mean sending them multiple emails with senseless topics or informing them of sales through generic advertisements. Rather, it means getting personal with the customer. Now this may take time and effort. This is where your employees come in.

A customer retention strategy shouldn’t be limited to the external customers. Internal customers such as your employees are just as important. Several studies have actually indicated that there is little correlation between customer satisfaction and customer retention. However, employee retention and customer retention do have a relation. Remember, it is through your employees that customers get a reaction towards your company. They are the front-liners of the company and they are the ones in constant interaction with customers. For example, no matter how good a product is, if the employees who handed them over to you are rude, customers will think that the whole company is rude.

How many times have you eaten in a restaurant, complained about bad service, and vowed never to return to that restaurant again? It wasn’t because the food (which is the product) is bad, or that the ambiance and the location was inferior, it simply was because the employee that handled your order did not do a good job. So develop your employees and give rewards for those with outstanding behavior.

Customer retention strategies are really all about common sense. Do a good job, and you’ll get good results. Train your employees well and customers will be praising you. However, don’t entirely throw out those strategies for customer retention. But when you do apply them, make sure you do it properly.