STUDENTS' CORNER - 211

Pull factors are essential to retain the customers.

We were discussing customer retention and the ways in which customers deflection can be removed  which is well-nigh impossible; therefore,  reduction in customer deflection is thought of.  We said the  efforts of customer retention which means in effect reducing customers deflection must begin at the early stage of budgeting.  Indeed, every strategy in the business demands , among other things,  money, that is investment. Investing in a strategy that aims at cutting down the deflection rate must be relevant and meaningful to the company; that is, the investment must prove a real investment that fetches some benefit to the company.  And to turn the money spent on that strategy into potential effective investment it is pointed out by the experts that the deflection rate must be arrived at because the deflection rate is the major cause for deciding upon the quantity of investment; that is, what percentage of share in the budget must be assigned for this specific task.

To arrive at the deflection rate, it is but wise to try to find out the causes of delection. Deflection can happen at various stages of the customers’ journey from the introduction to the company’s product or products to transform him, so to say, into a loyal customer.

Of course there are causes which the company need not pay attention much. Here we have to distinguish between customers; that is, we talk about different kinds of customer markets like consumer market, business market, global market and non-profit government market. Though each kind of market has its own marketing environment, they all have one common focus in  their business endeavours: value.  A very tricky elusive word because the meaning of the word depends on so many divergent factors like societal factors and social economy, just to mention two. But in business world, value has a common connotation;  value of a product depends on three facts: quality, service and price. Each fact demands attention and in fact has been discussed extensively. We need not go into that now.

Our concern here is how to retain the customer; that is, how to stop him from going away from the company’s product or products or service. In this context, without fail, the company must distinguish customers; those who are just casual buyers of the product; it means the revenue from the customer is not certain and it may be accidental; and, those customers who have purchased the products only once and they have not made repeat purchases; here also, the benefit to the company is not guaranteed.  Then we have frequent buyers and the last category is loyal customers who buy the products almost consistently for quite some time. When trying to arrive at the deflection rate, the analysis takes into account the number of customers at each level of their association with the company.

While budgeting for Retention, the last two categories must be given significant attention since they turn out to be a certain source of revenue for the company. And budgeting must be focused on the removal of causes of the customers of the last two categories primarily.

We will go into that in our next session: causes for deflection of frequent buyers and consistent buyers.