Customer loyalty, what a great word in such a competitive world. It became very known to everybody that retaining a customer is less expensive than attracting and stimulating interest in a new one. Different marketing studies showed that acquiring a new customer can cost as much as 8 times more than keeping an existing one. Loyal customers tend to spread a positive word of mouth among their circles, friends, and families about the business and they have more incentives to recommend it and are unlikely to change it, especially for price reasons.
What should be done? the secret could in the service quality, isn't it?
If the core of any business is to sell a product or a service. The abundance of similar products and services changed the markets to become more or less ferociously competitive with constant confrontation. Customer retention approach was developed then due to the need to minimize the costs and being able to focus on the effective methods to reduce the competition and competitors through relationship building. Thus, customer loyalty has received a lot of attention. Its significance resides in moving away from the quick-sell, transaction-based sales toward a different approach which rely on creating an everlasting relationship with each customer to boost repetitive buy and ensure a lifetime revenue with each client. Furthermore, being a customer-driven and its impact on the profitability raised many questions and led to a large number of studies with customer retention and loyalty building as a central topic.
It is possible to innumerate a great number of advantages that customer retention help to achieve:
Customer retention strategies and their effective employment might be identified as the key to the establishment of sustainable competitive advantage. employees and managers need to be able to demonstrate a deep understanding of the organizations' goals in terms of loyalty and retention.
The challenge now is to determine how to retain the customers and eventually enjoy these advantages.
Many researchers and practitioners linked closely satisfaction to loyalty. They claimed that high customer satisfaction decreases the customer incentives to get informed about the competitors or their products and services which lead automatically to the action of repurchase. Thus, the management needs to make sure that the barriers to consumer loyalty and retention are continuously examined and high enough. Moreover, some authors argued that brands and companies that enjoy strong customer loyalty has made every effort to determine their customers' needs and desires and employed all the means they possess to deliver them.
It is then possible to say that there are four key questions that the management needs to answer to ensure a customer-focused approach within the organization.
Satisfaction is a subjective concept. It is a positive feeling of happiness or deception following the comparison of the actual product or service functions and performance to the expectations. Closer is the performance to the perception, higher is the feeling of satisfaction. Thus, customer satisfaction can be considered as a principal ingredient of customer retention.
Also, today's' marketplace is continuously changing. Customer demands increase and their expectations become more challenging in particular in service industries. for instance, customer service in telecommunication is considered as the ultimate ingredient for success. in this kind of industries there are limited opportunities for differentiation and the strategies employed by the companies are almost similar.
Service quality can be found through the measurement of the difference between customer perception and his or her prior expectation. Smaller is the gap, higher is the quality of the service, greater is his satisfaction with the product or the service and consequently with the brand or the company itself.
Yet, some companies still focus too often on their own perspectives rather than in the customers' needs and want. In the same context, I can remember my experience with T-mobiles for whom I was a customer for years. When I moved to Oxford, I was hardly reached by my friends and loved one. I clearly was not happy with the company services anymore. After a very long call with different customer service agents trying to convince me to keep my contract, I managed finally to stop it. Two months later I found out that they are still charging me half for the fees. I remember one of the agents explaining to me that I keep all the company advantages if I pay half of the price even if I am not using the operator anymore which iI refused completely. This disrespect of my decisions changed my feelings from disappointment to anger.
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What should be done? the secret could in the service quality, isn't it?
If the core of any business is to sell a product or a service. The abundance of similar products and services changed the markets to become more or less ferociously competitive with constant confrontation. Customer retention approach was developed then due to the need to minimize the costs and being able to focus on the effective methods to reduce the competition and competitors through relationship building. Thus, customer loyalty has received a lot of attention. Its significance resides in moving away from the quick-sell, transaction-based sales toward a different approach which rely on creating an everlasting relationship with each customer to boost repetitive buy and ensure a lifetime revenue with each client. Furthermore, being a customer-driven and its impact on the profitability raised many questions and led to a large number of studies with customer retention and loyalty building as a central topic.
It is possible to innumerate a great number of advantages that customer retention help to achieve:
- The ability to charge and keep a premium price.
- The capacity to decrease the selling costs.
- Gaining a higher bargaining power with the suppliers and the channels of distribution in general.
- Building a greater barrier to possible new entrants.
- Creating a higher switching cost.
Customer retention strategies and their effective employment might be identified as the key to the establishment of sustainable competitive advantage. employees and managers need to be able to demonstrate a deep understanding of the organizations' goals in terms of loyalty and retention.
The challenge now is to determine how to retain the customers and eventually enjoy these advantages.
Many researchers and practitioners linked closely satisfaction to loyalty. They claimed that high customer satisfaction decreases the customer incentives to get informed about the competitors or their products and services which lead automatically to the action of repurchase. Thus, the management needs to make sure that the barriers to consumer loyalty and retention are continuously examined and high enough. Moreover, some authors argued that brands and companies that enjoy strong customer loyalty has made every effort to determine their customers' needs and desires and employed all the means they possess to deliver them.
It is then possible to say that there are four key questions that the management needs to answer to ensure a customer-focused approach within the organization.
- what would lead to real customer satisfaction?
- what are the customers' unacceptable levels of service as well as their expectations?
- How would a company increase its products or services quality?
- What are the changes needed within the company to be a true customer-focused?
Satisfaction is a subjective concept. It is a positive feeling of happiness or deception following the comparison of the actual product or service functions and performance to the expectations. Closer is the performance to the perception, higher is the feeling of satisfaction. Thus, customer satisfaction can be considered as a principal ingredient of customer retention.
Also, today's' marketplace is continuously changing. Customer demands increase and their expectations become more challenging in particular in service industries. for instance, customer service in telecommunication is considered as the ultimate ingredient for success. in this kind of industries there are limited opportunities for differentiation and the strategies employed by the companies are almost similar.
Service quality can be found through the measurement of the difference between customer perception and his or her prior expectation. Smaller is the gap, higher is the quality of the service, greater is his satisfaction with the product or the service and consequently with the brand or the company itself.
Yet, some companies still focus too often on their own perspectives rather than in the customers' needs and want. In the same context, I can remember my experience with T-mobiles for whom I was a customer for years. When I moved to Oxford, I was hardly reached by my friends and loved one. I clearly was not happy with the company services anymore. After a very long call with different customer service agents trying to convince me to keep my contract, I managed finally to stop it. Two months later I found out that they are still charging me half for the fees. I remember one of the agents explaining to me that I keep all the company advantages if I pay half of the price even if I am not using the operator anymore which iI refused completely. This disrespect of my decisions changed my feelings from disappointment to anger.
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