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Customer Retention Definition
What is customer retention? It’s not a difficult concept to describe, but truly understanding it can be mired in complexity. At its core, customer retention is simply about how many customers an organization is able to maintain over time. It relates directly to the number of customers the business loses and acquires over a time period, whether that time period be weeks, months, or years. Higher levels of customer retention are better, lower levels of customer retention are worse. Easy.
But, if you’re looking for more than just a basic customer retention definition – an in-depth customer retention meaning – you also need to understand the strategies by which customer retention is often improved. A customer retention definition by authors skilled in marketing would be incomplete if they didn’t discuss the common strategies towards getting there. Customer retention is not just about how many customers you retain from period to period, but also about how to improve that number. You can also see the customer retention meaning in Tamil.
The implications of customer retention are far more important than the general customer retention meaning. Customer retention is important because of what it implies about a business. A high level of customer retention means the business is doing well. It’s acquiring customers quickly and it has a high amount of retained customers. It’s doing something right. Meanwhile, a low level of customer retention means the business is shrinking. Its bottom line is going to be shrinking, too.
“Good” customer retention is based primarily on industry. Different industries have different levels of retention. An airline company is going to have different metrics for customer retention compared to a yarn store. Thus, companies need to keep their industry in mind – travel or eCommerce – when they’re thinking about whether their customer retention is good enough.
Customer retention strategies will also vary based on industry, as strategies that work for hotels won’t necessarily work for those within the automotive manufacturing field. And customer retention with B2B companies tends to be different from customer retention for B2C companies. So, again, while customer retention may seem quite simple (and the definition is very basic), it’s part of a far broader discipline.
Customer Retention Strategies
Customer retention is important. But how does an organization improve it? By building and executing a strategy. A company can’t just have the definition of retention and a number to shoot for. It needs to be able to tell its team how to prioritize, what to focus on, and which steps to take towards its goal.
Every business is different. The number of customers, the quarter of the year, the trajectory of the business – all of these things could ultimately change the company’s marketing framework and strategies. The basic, ultimate goal will always remain: having more customers at the end of the period than at the beginning of the period. But that’s a goal. A comprehensive strategy is how to get there.
Companies can build out their customer retention strategies by exploring the customer retention process, and by examining materials such as a customer retention strategies PDF or customer retention strategies PPT. But they need to take ownership of developing their own strategies.
Customer retention strategies in service marketing will be different from strategies in the hospitality industry or in manufacturing, so companies also need to keep in mind that they have to be specific. A B2B customer retention strategies list may not apply to B2C sales. Similarly, a customer retention strategies slideshare written for a specific business may not be able to be transitioned to a different business even if that business is in the same industry.
There are different levels of customer retention strategies, and different types as well. Positive customer retention strategies focus on what companies can do to keep customers, whereas negative customer retention strategies isolate what’s getting customers to leave. Once an organization has a well-developed strategy, it will be able to start testing out new tactics, and be able to change its strategies if they prove to be ineffective.
Average Customer Retention Rate by Industry
Every vertical or industry is going to have different retention rates or strategies. eCommerce will be different from insurance; eCommerce customers are more likely to shop around, whereas insurance customers will usually only shop around once their plan has expired. B2B software solutions are going to need to be tailored to the organization itself, and a company like Salesforce will have far different calculations and rates than a small start-up company.
Thus, companies also need to understand that retention is highly specific. For a large part, companies are competing against themselves. They need to improve their retention over their own prior numbers, rather than improving their retention against other businesses. There’s no point in comparing your organization to the Salesforce customer retention rate if you don’t have Salesforce numbers.
Still, the average customer retention rate by industry will give a company a vague idea of where they stand, and it’s something that many investors will consider. How to calculate customer retention rate in ecommerce is still the same customer retention formula used in any industry, it’s simply the percentages that change. An insurance retention rate formula will also be the same.
For the most part, the industries that have the highest churn tend to be industries where multiple interactions aren’t expected. Sellers of niche, one-time products, for instance, such as a seller of a “home brewing kit,” might not expect to see multiple people because once they’ve sold their product, they’re done. To improve customer retention, they may need to innovate and find ways they can keep customers coming back.
Customer Retention Examples
Examining customer retention examples from other teams can go a long way towards building additional understanding. A customer retention PPT or benefits of customer loyalty PDF will give a broad overview of customer retention, but it’s easier to understand the strategies involved when you see customer retention company examples in practice.
- Nike’s fitness app encourages customers to interact with the brand during their daily life. Nike’s app hosts a number of fitness challenges, ranging from weight training exercises to running. This app is tailored towards what the customer wants to see, and gives them notifications based on their own settings. Customers are more likely to feel loyalty towards the brand because the brand is delivering value to them.
- Mint’s personal finance website integrates with offers from other companies to create a full ecosystem of products and services. By referring customers to other products and services they may like, Mint secures its own customer retention and value. It is able to build upon its own value by referring its customers to other valuable products.
- Wal-Mart’s integration with third-party financing services such as Affirm makes it possible for customers to put products on payment plans. This keeps customers coming back as they know that financing will be easier through Wal-Mart, that they can get what they want now, and that they don’t need to rely upon other credit vendors.
For more information about customer retention examples, a customer retention PPT or customer acquisition and retention PPT can help – but it’s truly understanding implementation that will aid a team during deployment. Every organization is different, and every organization will need to develop its own strategies and frameworks. Nevertheless, information from other companies can be a great starting point.
Customer Retention Management
There are many moving parts for a customer retention team. It’s not enough to implement customer retention processes; you need to have proper customer retention management. The customer retention model is a complex one. There are many metrics to pay attention to, customers to serve, and employees to assign. Using technology to manage this process helps to keep everyone on the same page – and improves overall visibility.
You can begin by looking at customer retention strategies case studies, including what worked and didn’t work for businesses within your industry. Remember that your industry and your business size matters. Customer retention strategies in CRM solutions need to be married with new processes throughout your organization, and a company culture of retention has to be developed.
Proper management means that an organization will be tracking the appropriate metrics and that the organization will be reacting when strategies aren’t working. Organizations must be able to see how they are performing compared to how they were performing, and must be able to pivot accordingly. This requires that employees be empowered to act and understand their roles within the new system, and that the technology be able to support their new metrics and goals.
Without the right technology and processes, a company can emphasize retention, but may not be able to truly achieve it. While it may be a desired goal, employees will not feel as though they have the tools to work towards it.
Importance of Customer Retention
There are few metrics as important as customer retention. But what defines the importance of customer retention? What are the benefits of customer retention, and what does it say about a business?
A benefits of customer retention PDF will explain why customer retention defines the overall health of a business. This is the ultimate conclusion of customer retention. Customer retention shows whether a company is shrinking or growing like crazy. It proves whether a business and its products and services are viable within the market.
If customers are renewing, then they are happy with the product (and may not even be able to live without it). Meanwhile, falling customer retention means that the company may be doing something wrong, and may need to change its processes and model quickly if it is to survive.
At its heart, customer retention is really quite simple. It’s a metric by which a company measures whether it’s growing or shrinking. But achieving customer retention is far more complex than understanding it. Companies spend years fine-tuning and improving upon their customer retention tactics, and many companies need to dig down deep and analyze their customer base to figure out what really makes them tick. Because there’s no one-size-fits-all solution for customer retention, companies need to find talented experts that can guide them.
For more information about customer retention, look for an importance of customer retention PDF, importance of customer retention PPT, or importance of customer retention slideshare.