Customer retention shows the ability of firms to retain existing customers. It is a process of making customers stay with the company. It helps to minimize customer churn rate. Customer retention helps to increase brand loyalty that improves the image and goodwill of the firm. In this post we are going to discuss some major benefits, needs or importance of customer retention.
Importance Of Customer Retention
The main importance of customer retention can be pointed out as follows:
1. It Lowers The Marketing Costs
As we know that customer retention is an act of encouraging buyers to purchase company's products or services over a period of time, it helps to decrease marketing and advertising expenses required to acquire new customers. Therefore, it saves costs, time and effort.
2. It Increases The Profit
It helps to increase customer engagement because retained customers purchase frequently and spend more times than new buyers. Therefore, it increases the sales that leads to increase in the profit.
3. Improves Brand Loyalty
Another importance or benefit of customer retention is that it increases the brand loyalty. It makes good customer relation that helps to improve brand image and reputation of the company.
4. Provides Competitive Advantage
Customer retention helps the business to gain competitive advantage. It increases customer loyalty and brand image that helps to differentiate the firm's brand from rivals in the market. It also helps to expand the market share.
5. Long-term Relation
It builds long-term relationship with customers that helps the firm to survive in difficult situation. Therefore, it supports sustainable growth of the company.
6. Less Price Sensitive
As we know that customer retention increases customer satisfaction and loyalty, customer may ignore small increase in the price of the products. So, company can earn more profit by increasing the price of its price/services.
7. Regular Feedback
Loyal customers provide useful feedback and suggestions that help the company to improve their quality and customer services.
