STUDENTS' CORNER - 212

Customer Retention

Generally all business heads know for certain that there will be some percentage of customers’ exit from the company and therefore some efforts are due to acquire new customers.  Before engaging oneself in acquiring new customers, it becomes a good business head to try to know why customers leave the company. Of course, it is not easy to pinpoint a reason for his exit because usually he or she does not speak out why they leave a company.  All the same there are some well-known reasons that influence a customer to switch to some other company; they are poor products, poor service or high prices.

When trying to retain a customer, it is said the company must to some extent correctly know the value of the customer, value in the sense the profitability that accrues to a company through the customer. Casual customer and impulsive customer indeed cannot attract great attention. But consistent customers and loyal customers must be recognized and regarded differently.

If a customer leaves for a different region where the company does not have any outlet, the company cannot do anything about him or her. Of course for the sake of a few customers, attempting to establish outlets in that region is commercially not valid nor desirable. Your efforts must be commensurate with the monetary returns; otherwise, time, energy and money become undervalued and consistent undervaluing will lead to loss, real loss, unwanted loss to the company. No company indeed will venture like this.

On the other hand, if the customer is not satisfied with your product, or service or even prices,  it is a sign the company must attend to them.  Marketing analysts, production managers, distribution personnel and sales people—all must be involved to arrive at almost exact market assessment of the product, service and prices.

With regard to the product, the company must be aware of its market share and much more importantly of its close rivals and competitors who are just a little behind the company in the market share. None watches you more closely and consistently than your rivals and competitors. In such circumstances, the company may be tempted to go in for discount. It is a very dangerous and a hasty move which will not be beneficial to the company for long. While facing the crisis of customers’ exit, discount must not be thought of particularly for two reasons.  Leave alone the casual customer. If discount is resorted to, it will have adverse effect on the loyal and consistent customers.  Their responses can be put in two facts:  they will think you were charging your products higher prices; two, when the discount has to be discontinued, they will think your product is not worth the price now without discount.  Discount is easy temptation but hard result later to digest.

What more administrative steps can be thought of while facing the turbulent crisis of customer exit, we will see some more of it in our next session.