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.
