Today’s business world has become ultra-competitive and running a successful business is becoming tougher and tougher. Some believe that companies that focus completely on customers are going to win the competition. A few businesses fail not because they do not have enough customers but they fail to retain and win new customers. It’s important to be able to differentiate between low value and high value customers and also to devise strategies to keep them along. Therefore, it is extremely important for every entrepreneur to find and keep valuable customers with them in order to succeed.
Here a question arises that adding new customers in a business can be profitable but why is retaining old customers so much important for a business?
Importance of customer retention for a business
Customer retention is a strategy to keep company’s customers for generating a regular income stream. Primarily, the strategy aims to hold customers and prevent them from going to the competitor. It is vital for any business as a slight increase in customer retention rate has a remarkably positive effect on profitability and also companies with high retention rate grow faster.
However, customers can only be retained if they are satisfied from your business and are loyal enough to resist a competitor’s offer. Another theory reveals that satisfied customers can also walk away upon finding more attractive offers. Therefore, retention strategy must be formulated based on the following combination of the following important points.
• Customers should be highly satisfied with your product quality and customer services.
• Give reasons to customers to continue doing business with you by adding more value to your product and services.
• Encourage customers to spread good words of mouth about your business and offer incentives.
What to do to increase customer satisfaction?
Customer satisfaction is actually customer’s perception of the level up to which a particular company can fulfil their expectation. People take purchasing decision on the basis of perceived value. They calculate perceived value on the basis of cost, emotional attachment with the brand and other things like brand image, marketing, product function, image and so on. It depicts that to increase your customers’ satisfaction, all promises and expectations must be met.
To meet customers’ expectations, you must understand what they expect from you and how you can do it perfectly so that your competitors cannot snatch them away from you despite making attractive offers. The ability to quickly deal with issues once they arise, is the key ingredient to success. To keep and improve your customer satisfaction, consider the above mentioned points and implement them in your business as quickly as possible. Do not forget that only satisfied customers tend to be loyal.
Now you know the correlation between customer retention and customer satisfaction so it is advisable to launch an excellent complaint handling service to attend to whatever your customers have to say about your products and services.