ICLP - the global loyalty marketing agency - is an expert in customer retention.
Customer retention is an imperative in modern business - a strategy whose objective is to keep a company's customers and to retain their revenue contribution. Primarily it aims to prevent customers from defecting to alternative brands / going to the competition.
As all managers know, it costs less to keep an existing customer than to acquire a new one, thus having a customer retention strategy is common sense.
Customer retention is the driving force behind Customer Relationship Management (CRM), relationship marketing and loyalty marketing.
Studies across a number of industries have revealed that the cost of retaining an existing customer is only about 10% of the cost of acquiring a new customer, so customer retention makes powerful, economic sense.
Putting in place a customer retention strategy increases customer profitability as acquisition costs only occur at the beginning of a relationship, so the longer the relationship, the lower the amortised cost; account maintenance costs decline as a percentage of total costs (or as a percentage of revenue); long-term customers tend to be less inclined to switch, and also tend to be less price sensitive; long-term customers may introduce new customers via verbal referral; long-term customers are more likely to purchase additional products; customers who stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share; regular customers tend to be less expensive to service because they are familiar with the process, require less 'education', and are consistent in their buying behaviour; increased customer retention and customer loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle.