Q:

What is the importance of customer retention?

A:

Quick Answer

Customer retention is integral to corporate success because it increases profits, explains Entrepreneur magazine. Satisfied customers become loyal customers who repeatedly patronize the company, increasing its earnings. Companies with effective customer retention strategies also benefit from positive publicity via customers' blogs and social media sites.

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What is the importance of customer retention?
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Full Answer

There are many approaches to customer retention, and the best choice for a given company depends on its industry, corporate goals, size, products or services, customer base and local cultural norms. Successful international companies use a combination of company-wide retention strategies and retention techniques customized for each city, state or region in which the firm operates.

Popular and effective customer retention strategies include personal customer interaction, involvement in or sponsorship of community activities and loyalty reward programs. The most important element in a customer retention plan is providing high-quality goods and services, even when quality upgrades slow production and delivery. All other retention techniques depend on quality and are ineffective without it. This relationship was confirmed by a Gallup poll that revealed customers who received quality goods and courteous services were much more likely to develop loyalty for a company than those who received speedy service but mediocre products.

Personalization is another factor that influences customer retention. For example, personalized deals and Internet promotions increase the average amount of time a customer stays on a company's website. Personalized content also makes customers feel important, further increasing their probability of developing company or brand loyalty.

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