Importance of Customer Retention?

What's the importance of customer retention?

Answer

Date: February 12th, 2008.

Every company, even the best ones, loose customers. It's a given. To stay at the status quo, or even grow the business you need a steady supply of new customers to replace the old ones.

Now, if your business isn't good at customer retention, which is the ability to keep customers, your company is loosing a lot of customers. So you need to replace them with a lot of new customers, before you can continue to grow.

This is bad for business for two reasons:

On average, it costs 5 times as much to get a new customer than to keep an existing one.

Customers who have bought from you before, are much more likely to buy from you again

Yet there are so many companies that spend millions and millions to get new customers, and next to nothing to keep them. They should do an ROI (Return on Investment) comparison between the two... I know where I would put MY money! :-D

Kind regards,

Erwin.

Comments for
Importance of Customer Retention?

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Aug 02, 2010

:)
by: tasha

i don't get it :/
what can you do then? x

Mar 01, 2011

Double minded
by: Anonymous

i don't actually get to this point of view....

Apr 13, 2011

huh
by: Anonymous

that doesnt answer the question at all.. the question is what is the importance of customer retention?

Apr 14, 2011

customer rentetion
by: Ameria

importances of customer rentetion

Jul 06, 2011

your
by: Anonymous

eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Jul 10, 2011

An explanation
by: Pascale

Ok so to answer the confused above...
Let's do this step by step
We all know that without customers our business will not survive.
As it says all businesses lose customers for a number of reasons(and yes you need to know why, but that is another story).
So if you are losing customers you need to replace them so that means getting new customers.
However it also says that it costs 5 times as much to recruit new customers as to retain current ones.
So customer retention is important to keep your business going and to keep new customer recruitment costs down.
The added bonus with your "long" term customers is that they will have a certain amount of trust in your business and will spread the word about you.
When I find a good restaurant I try it a couple of times more to make sure it was not a fluke and then I take my friends and family...A similar scenario takes place for many businesses.

Jul 23, 2011

etc
by: Anonymous

you mya lose customers due to many reasons, bad customer service, they may die, move away, change habits etc.

Aug 05, 2011

too bad
by: Anonymous

Not at all cleared

Sep 20, 2011

Rentention is Best
by: Anonymous

It is better to maintain your csutomers rather to increase . To get new customers you need to advertise, maybe distribute free products for trial, pay sales ppl to go out, travel and get sales. If you maintain and are consistent with your product/service offerings then not only will you have guaranteed revenue, but aty no cost to you they tell a friend, and you build a referal engine until your customer base develops.

you can imagine if you are consistently losing customers even new ppl you seek will be relctant to do business as customers will be reluctant to spend.

Nov 05, 2011

The Customer is a customer untill they become a liability
by: Anonymous

I've been in business for over 30 years and 2 generations of parents in business. A lot of the new stuff is only one side of the coin. If a customer costs you money or distracts you from YOUR business to attend THEIR business, they take over YOUR business. While it costs 5 times as much to get a new customer, it also costs 80% more to keep a bad customer than a good one. For most businesses that is a 30% to 50% loss, that is not a customer, that is a liability. A good one lets you use your expertise to serve them better than they could themselves. A bad one tries to get you to serve them with their expertise, a recipe for failure.

Nov 10, 2011

IMPORTANCE OF CUSTOMER RETENTION
by: Anonymous

Remember that it is saying customer retention.

What I think the assumption is that the customer has still retained the status of the customer only that can have a choice of walking away.

Based on this assumption, the answer above summaries the bottom line of any retention prg.

You can not keep changing the variable in the equation; you cant solve an equation with several unknowns!!!

So analyse the qstn to see the dimensions and determine the underlying assumptions.

Otherwise that is why others think they have answered exam qstns correctly meanwhile they have missed the demands of the qstn.

I think the answer summarizes it from a business point of view. From marketing point of view, may be we can add some fat to the bones but at the end of it we want profits and we want word of mouth.

Nov 21, 2011

student NEW
by: faisal khan kts 4

Retention of the customer is a huge asset for any orginisation specially when it comes to retail business.once yiu have acquired the customer strategy for any orginisation should retain him by giving good offers which realy encourages the buyer.offers can be loyality cards discount cards
points based system cards.when you buy more you ll get more discount.once you retained the cutomer by adding more values he can be your loyal customer.that is what any orginisation is main objective and also targets

Nov 21, 2011

retention NEW
by: faisal khan kts 4

Retention of the customer is a huge asset for any orginisation specially when it comes to retail business.once yiu have acquired the customer strategy for any orginisation should retain him by giving good offers which realy encourages the buyer.offers can be loyality cards discount cards
points based system cards.when you buy more you ll get more discount.once you retained the cutomer by adding more values he can be your loyal customer.that is what any orginisation is main objective and also targets

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