Customer Retention Strategy, an Effective Approach to Profitability

Customer Retention Strategies

Building a successful business amongst fierce competition has become extremely challenging these days and business owners have come to the harsh realization that it's not enough to simply craft creative promotions and slash prices. Though technology has added the flair of convenience to everything it touches, it's also created an informed society filled with consumers who realize they can choose where they acquire products and services. Due to the short supply of loyal customers business owners are reallocating their resources to focus on developing a quality customer retention strategy to help take back that competitive edge.
A study of numerous industries completed by Bain & Company revealed that if businesses designed and implemented a successful customer retention strategy that delivered a 5% increase, profitability could increase as high as 95%. Other customer loyalty studies have revealed that the value of a customer increases over time because they become more efficient users of products and services purchased, have less impact on operational costs and increase customer acquisition through word of mouth. More importantly, existing customers are far less concerned about the cost of products and services and less likely to be persuaded by the competition.
Because businesses come in all shapes and sizes, it's fortunate that developing a valuable customer retention strategy doesn't have to be overly complex, costly or time consuming. The key is to take the time to understand where the commitment and investment can best be applied and obtain the tools necessary to make it work. Also, just as important, is that business owners understand that efforts must be a company-wide initiative, as all aspects of the business will be affected. The best segmentation, creative messaging or perfectly executed promotion will deliver few results if businesses fail to work together to add value. Creating a solid foundation will lead to increased customer loyalty and business profitability.
In order to develop an effective customer retention strategy, it's imperative that businesses connect with their existing customers and ask the following questions: 1) What existing customers do we want to retain? 2) What products or services do these customers find valuable? 3) What incentive, motivational programs will create a positive response from these customers? Developing a strategy based upon information that provides a unique insight into customer behavior is the first step toward profitability.
The final ingredient the most successful customer retention program is also the one most overlooked by many businesses, which is realigning customer service role to support the company's efforts by enhancing the customer experience. If businesses skip this step and remove the human interaction from their retention efforts, its likely customers will feel treated like a transaction and will quickly take their business to the competition. Businesses must ensure that the rewards being offered to their existing customer base is accompanied by effective communication coupled with superior customer service efforts that focus on building the relationship.
In short, in today's vast marketplace a business has a better chance of survival when business owners concentrate on efforts that place an emphasis on enhancing product and service offerings that motivate their existing customers. A loyal customer is a long-term solution to sustaining profitability and integrating a successful customer retention strategy into business operations will help business owners stand out amongst their competition.

Customer Retention Strategies

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