Customer retention generally works on the 80-20 principle wherein 80% of your business may be contributed through 20% of your business. Thus it becomes very important to retain customers. Here are three strategies mentioned in detail to increase customer retention.
1) Offering financial benefits to increase customer retention –
Financial benefits such as frequency programs as well as club memberships provide exclusivity to customers and therefore they are retained to the product / company. Such financial benefits always attract the customer.
The marketing manager needs to understand that the expenses done to attract new customers is higher than the one done to retain customers. Thus, a part of the marketing expense can be passed on as financial benefit.
2) Increasing social bonds for customer retention –
Especially true for services sectors, increasing social bonds with the right cues helps the customer relate better with the service / product and therefore helps in developing social bonds with the company / brand. Once such social bonds are developed, the customer rarely shifts to another brand. A typical example would include Green marketing adopted by many banks which becomes a social bonding factor for people who love going green.
3) Building structural ties for customer retention –
This strategy believes in making long term ties with the customers such that he is retained with the brand / product / company for a longer time. Sub strategies might including tying up for a longer time with the customer, charging lower prices or turning the service into long term. Many firms have introduced a retention discount, so that if a customer comes again and again to the same firm, he or she will receive a specific discount from the firm for the loyalty.
With increasing competition in each sector, customer retention is becoming more and more important and therefore these strategies are increasingly being used by major organizations to retain customers.