Focus on getting new customer to pump up market share and increase sale is the prime forte for sales and marketing team of an organisation. Researchers have shown that organisations, in the name of customer retention, are more focused on increase of sales and inflating market share. The organisations are biased and investing huge to get new customers rather than holding the customers exists.
According to the HBR study
– A 10% raise in retention can enhance the company’s value by 30%
– It costs seven times more to attract and acquire a new customer than retaining the existing one.
– A 5% retention boost can result to a 25% to 90% profit augment.
What is Customer Retention?
Before going ahead let’s define Customer Retention. As a layman it is those customers who don’t toggle brands and stay involved with one company or Brand. But at the same time it does not include every customer and to the utmost surprise most of the companies are calculating the retention incorrectly. Customer is free and empowered to change the brand any time so for any and every organisation every day is renewal time. Even if the customer who is bound by a contract can leave your brand any day is he is not been provided the due importance. The term “the Customers” has no relevance left in it as the heterogeneity has taken over as major contributor while framing the retention strategy.
Who is responsible for Customer Retention
Ideally retaining customers is the responsibility of the entire organisation as a team. It is the aligned accountability of all the teams, not only the sales and marketing. Like the product creators have to create and develop a most suitable and relevant product. The marketing team holds the responsibility to put all efforts to generate sales. The technical managers are holding the responsibility to handle the customer effectively and happily. The executive team needs to place the right person at right place at right time. As an organisation the team is comprised of the receptionist who has to reply to the phone calls politely to the Security Guard whose behavior counts the most while handling the customers.
The entire structure if aligned can produce quality products and services and this alignment is the foundation for the internal metrics which support retention. I believe that the time retention begin to fall, everyone in the organization needs to start looking for ways they can recover the customer in whatever manner they can contribute to retention.
It’s vital and significant that the customer retention is the responsibility of the organisation not of the teams and individuals.