subject: What Is A Customer Retention Program [print this page] Let's examine how you can install a customer retention program:
- Measure retention rate over a sustained period. If you have a few large customers, the calculation is simple. With a large customer base, the use of percentages or actual customer counts will give you a clear measurement.
- Isolate the causes of consumer defections. A consumer that discontinues business relationships or moves to an area not serviced by your firm is one thing. Those leaving simply because of poor product quality, excessive pricing, shabby customer service, or faulty order processing are fairly another matter and cause for concern. Once identified, concentrate on specific corrective actions and incorporate them into your business plan.
- Calculate how much profit you would forfeit from lost clients. This is expressed as a customer's lifetime worth.
- Determine what it would price your company to decrease the defection rate. As lengthy as the price is less than the lost profit, the expenditure is justified. Think, too, of the long-term effects of consumer loyalty and its impact on existing markets, as well as on winning new ones.
Thus, to retain clients, your efforts ought to focus on serving them better than competitors do. An effective approach is to invest in the technologies and numerous customer relationship management (CRM) programs that integrate all relevant information on each customer across the enterprise. Doing so increases your capability to facilitate more efficient planning, marketing and servicing decisions throughout the customer life cycle.
Central Marketplace
Central means that divergent forces surround you and threaten your marketplace position. These forces could be as diverse as watching dynamic small companies niching away at your market. Or observing large companies offering dazzling feature-laden products. Or looking at technology-rich firms generating new applications overlaid with enhanced value-added services.
Your best course of action under those conditions is to take active control quickly, even if it compels you to venture away from your home markets and comfort zones. For instance, ally with firms in joint relationships so that the cumulative effects yield greater market advantages and strategy options than you can accomplish independently. For many companies the merger and acquisition (M&A) route, begun in earnest during the 1980s, has proved the strategy of choice.
