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Make Customers Come Back - Winning Customer Retention Strategies

Aug 17, 2007
Customer Retention marketing is a tactically-driven strategy to keep relationships with customers going and increase customer interest. This strategy relies on the study of customer behavior. Here are the basic tenets of a marketer that seeks to increase customer retention:

1. Past and Current customer behavior

This is the best predictor of how customers will behave in the future. They are the characteristics marketers should most often look at. Analyzing customer tendencies and trends allows the marketer to anticipate, if not predict, the customers reaction to different situations. The marketer must take note that behavior is action oriented, not a description. For example, being a 35-year-old woman is not a behavior; it's a demographic characteristic.

For example if you know from history that customer A is likely to make a purchase if presented with a discount promotion, then you might want to change your marketing tactics to include promotional selling when approaching this customer. A great deal of observation is needed if you desire to predict your customers' behavior. This involves a great deal of notetaking as well as watching what reaction the customer has to different situations.

2. Active customers are happy customers

Happy customers are retained customers. If your keep your customers involved, they develop a sense of contentment from the fact that they are in control. Marketers will take advantage of this by offering promotions that allow these customers to exercise this feeling of control. The most common means of achieving this kind of relationship with your customers is to offer promotions such as discount cards, discounts, sweepstakes, coupons, and customer points that can be converted to prizes.

Remember, if the marketing is not active, then the customer is not active as well. And as we said earlier, active customers are happy customers. Inactive customers on the other hand are lost customers. So activity on the part of the marketer is very important. Customer retention relies heavily on satisfying your customers.

3. Customer Retention depends on:

- Action
- Reaction
- Feedback
- Iterate

This is a cycle that the marketer should perpetuate. If the marketer fails to continue this cycle, more or less, they will start losing the customer. This process makes for a constant improvement in customer relationship and in marketing power. It also optimizes the marketers' strategy toward the customer. Remember that not all customers are alike, so adapting your strategy to fit the unique types of customers is vital in improving customer retention.

- Listen -
It's funny, but it's not the marketer who does all the talking. If you expect to have your customers to listen to you, you must also learn to listen to them. Remember that marketers are trying to present products or services that the customer desires. The marketer will never learn the right approach towards addressing these desires unless he listens to his customer.

- React -
Watch for the customer's reaction to different situations and note them down. If the customer shows favorable reaction to a particular type of pitch talk, try that approach again next time. If the customer shows a negative reaction to, let's say, too much talking by the marketer, the marketer should take note of this.

- Feedback -
Knowing what goes on in the mind of your customer is very important. Usually they will be glad to have their thoughts regarding your service known. The marketer may receive this feedback through suggestion forms, interviews, and other methods.

4. Allocating Marketing Resources

Customer retention is not free! You should consider customer retention as a major activity. And all major activities require resources. If customer retention is not given proper attention, it will fail. Customer retention needs resources to be effective.

You should not be afraid of its costs because customer retention pays its own dividends. Remember that is easier to keep a customer than to win new ones. And that it is easier to lose one than to gain one. Lost customers will probably never come back. And to top that, they spread negative publicity about you. On the other hand, customers that are happy attract more customers to your service or product. Customer retention, therefore, should be an integral part of any business plan.
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