In order to understand retention, one must know Customer Lifetime Value, CLV which is defined as the idea that if you fuss over a customer to make sure they repeatedly purchase your product, you will make a lot of money over several years. Therefore it makes sense to do a lot for the customer in the beginning because over the “lifetime” of the relationship they have with you as one can sell a lot of products and recover the costs of incentives, free shipping, gift wrapping and other things you did in the beginning to hook them in. Also the use of the “Velvet rope” strategy, which means focusing on high paying customers, or customers they want to attract from a narrow target market segment which result in huge sale of products. This is used to limit your customers that you might think will come back to become regular customers and in a way which seems suitable for the type of clientele the company wishes to have. Moreover, choosing your customers carefully so that they fit the products and services you are offering in the market. The consequence of this approach means that adopting a Velvet Rope policy can lead to CLV, which can in turn save you money on marketing promotions to the public in general. Instead of wasting money on mass advertising at large, you can focus on your niche market, and, for some special types of products and services, it works. However if you are catering to all demographics you would not want to employ a “velvet rope policy” since competitors are targeting everyone and it would be detrimental to your company because you wouldn’t be taking advantage of all of our markets.
This terminology is self explanatory which means that satisfied customers will provide referrals to new customers who are often families and friends. Your business should aim for this as you should first try to satisfy your existing customers to the maximum by providing a good customer service and hope that these satisfied customers will recommend your products to their friends and families. Often referrals leads to brand ambassadors as these satisfied customers will only purchase your products and they give you more business. You can aim to start a new referral program in which, the customer that brings in more people will be given a gift coupon for every referral. In the long run this will be more advantageous for your company.
You should also strive for Customer Relationship Management as you should be aware that this economy is extremely competitive and every company is adapting different policies and strategies to gain more and more customers. So in order to retain your customers; you should aim at building good relationships with your customers. The CRM strategy would allow your business to solidify its relationship with its customers. Your business should strive for good customer service and should be always available through phone, email and a recent system of online chat “help” that gives customers the option to ask anything and receive feedback right after.
It’s bound to happen to any organization that something goes wrong. In that case, recovering consumer confidence is crucial so that they will buy your product in the future. Branding a new product or service differently can change the perception that people have of your business. Making it unique and attractive. This way you can aim to recover any potential losses and stay competitive in the long run.
By: Shizra Saqib