The Vision

4Ps (7Ps in Services Marketing), STP, BCG Matrix, Product Mix, Length, Width and similar stuff are fundas of past. So needed to come up with something which is considered important right now and link it with something in psychology. And Customer Retention Marketing is a tactically-driven approach based on customer behavior.

So what exactly do I mean by “RETENTION” in the topic of my discussion/research.

We did not get to hear about terms like ‘Brand Switch’ & ‘Customer Retention’ earlier in monopoly markets. But with increasing competition, a customer now has many options of products/services to choose from to satisfy his/her needs. The companies now realize that if a customer switches from their brand to some other competitor’s brand, it becomes very difficult to bring them back as damage once done is tough to repair. The switch drivers, even if analyzed, are difficult to address and win customer confidence again.

Other than this there are reasons why Customer Retention is more important to a business than ever before one of them being that it costs much lesser to retain an existing customer than to acquire a new one. The logic is that because a customer is aware about the company, the brand, the product/service offering, etc, they are more likely to buy again from the same company.

Why It Works?

Customer retention programs are the most cost-effective form of marketing. Customers already know the brand, and the company, in turn, knows something about their needs and buying history from information gleaned from sales transactions, warranty registrations, service calls, and satisfaction surveys. With this data, the company can make informed estimates about their future readiness to purchase the same product again as well as forecast the potential to cross-sell or up-sell them additional products and services. If managed effectively, existing customers will find it increasingly convenient to buy the same brand.

A personalized customer retention program may be ongoing like a newsletter or pegged to an event like a special offer or after-purchase follow-ups. The most important element is planning-one wants to achieve the best match up of business offerings and customer needs. Results get even better when a campaign uses both sender and recipient personalization, optimizing the advantage of your existing relationship.

So the basic theme is “Speak to your customers personally, and they are more likely to listen. If they listen, they are more likely to buy from you.”

Various factors to be considered when measuring customer retention are time between purchase, average transaction value, customer lifetime value, frequency of purchase, and transaction recency. Each of these metrics will tell different things about company’s relationship with a customer and its ability to retain them.

Some Programs that might work for an organization are Brag Letters (Company brags about recent accomplishments), Newsletters (Perceived as benefit provided for free by the sender), Greeting Cards, Post Purchase – Thank you Card, After Sales Questionnaire, Call Centre, etc.