Customer retention

Customer retention refers to the ability of a company or product to retain its customers. High customer retention means customers of the product or business, or to any other product or business, or to non-use entirely. Selling the company’s attempt to reduce customer defections . Customer retention starts with the first contact with a customer and continues throughout the entire lifecycle of a relationship and successful retention efforts. A company’s ability to attract and retain customers is their productor services, but also provides services to customers, the value the customers actually generate as a result of utilizing the solutions, and the reputation it creates within the marketplace .

Successful customer retention involves more than giving the customer what they expect. Generating loyal advocates of the brand might mean exceeding customer expectations. Creating customer loyalty puts ‘customer value rather than maximizing profits and shareholder value at the center of business strategy’. [1] The key differentiation in a competitive environment is often the delivery of a high standard of customer service . Furthermore, in the emerging world of Customer Success Retention is a major objective. [2]

Customer retention has a direct impact on profitability . Research by John Fleming and Jim Asplund says that it is more efficient than usual.


The measurement of customer retention should distinguish between behavioral intentions and actual customer behaviors. The use of behavioral intentions is an indicator of customer retention, which is a strong predictor of future behaviors, such that customers will have a stronger repurchase intention. Customer repurchase and retention behaviors can be measured in a variety of ways that are enumerated in several award-winning articles published in the discipline marketing. Keiningham and colleagues (2007), [3] The different studies that also involve different metrics to measure customer repurchase intent and actual repurchase behaviors are summarized in a series of reviewsGupta and Zeithaml (2006), [4] and Morgan and Rego (2006). [5] These studies point to the following general conclusions:

  1. Customer satisfaction is a strong predictor of the customer repurchase intentions and repurchase behavior
  2. Repurchase intentions are statistically significantly, and positively associated with repurchase behavior: as people repurchase intention increases, so does their likelihood to actually repurchase the brand. However, the magnitude of the association, though positive, is moderate to weak-suggesting that intentions and behaviors are not interchangeable constructs to measure customer retention.
  3. The association between different retention is not always straightforward. It may be (a) non-linear exhibiting increasing or diminishing returns, and also vary by type of industry.
  4. Customer retention is a strong predictor of a firm’s financial success, both using accounting and stock market metrics. A study of a Brazilian bank has shown that it has been more successful than ever before. [5]

In terms of measurement, the intention measures can typically be obtained using scale-items embedded in a customer survey. The retention behaviors must be measured by the volume and the value of the volume. This requires that the firm should have a strong customer information management department that can capture all the relevant metrics that may be needed for analysis. In a typical firm, these may come from various sets of departments such as accounting, sales, marketing, finance, logistics, and other customer research.

Antecedents and drivers

Customer retention is an outcome that is the result of several different antecedents as described below.

  1. Customer satisfaction : Research shows that customer satisfaction is a direct driver of customer retention in a wide variety of industries. Despite the claims made by some one-off studies, the bulk of the evidence is unambiguously clear: there is a positive association between customer satisfaction and customer retention. , product, and industry characteristics. Some companies and individuals have created mathematical models to evaluate customer satisfaction. [6]
  2. Customer delight : Some scholars argue that in today’s competitive world, simply satisfying customers is not enough; firms by providing exceptionally strong service. It is delighted customers who are likely to stay with the firm, and improve overall customer retention. [7] More recently, it has been argued that customer satisfaction may be more applicable to hedonic goods and services than for utilitarian products and services. quote needed ]
  3. Customer switching costs: Burnham, Frels, and Mahajan [8](2003, p.110) define switching costs as “one-time costs that customers associate with the process of switching from one provider to another.” (1) financial switching costs (eg, fees to break contract, lost reward points); (2) procedural switching costs (time, effort, and uncertainty in locating, adopting, and using a new brand / provider); and (3) relational switching costs (personal relationships and identification with brand and employees). A recent meta-analysis examined 233 effects of over 133,000 customers and found that all types of switching costs increased customer retention-and, relational switching costs have the strongest association with customer repurchase intentions and behavior.
  4. Customer relationship management : Acknowledging the social and relational aspects-especially those embedded in services-it has Relationship management when firms can take a longer perspective, rather than a transactional perspective to manage their customer base. However, it should be noted that they are not profitable, and worth retaining; sometimes, short-term transactional customers can be more profitable for the firm. [9]Such companies may have strategically developed a framework to manage unprofitable customers.

Customer lifetime value

Customer lifetime value Enables an organization to calculate the net present value of the benefit year will Realize organization was customer over a period of time Given. Retention Rate is the percentage of the total number of customers in the world.

Standardization of customer service

Published standards exist to help organisms deliver process-driven customer satisfaction and Customer Success in order pour augmenter the lifespan of a customer. The International Customer Service Institute (TICSI) has released The International Standard for Service Excellence (TISSE 2012). Expertise in the management of customer service and customer service. TESSE 2012 focuses an organization’s attention to delivering customer satisfaction by helping the organization through a Service Quality Model. TISSE Service Quality Model uses the 5 P’s – Policy , Processes, People , Premises , Product / Service , as well as performance measurement . The implementation of a customer service standard leads to improved customer satisfaction, higher levels of customer satisfaction, and customer loyalty . [10]

See also

  • Churn spleen
  • Customer attrition
  • Customer loyalty
  • Customer service
  • Customer Success
  • Serial switcher
  • The International Customer Service Institute


  1. Jump up^ Reicheld, Frederick (1996). “The Loyalty Effect: The hidden strength behind growth, profits and lasting value”. Watertown MA .: Business Harvard Review.
  2. Jump up^ Mehta N., Steinman D. and Murphy L .: Customer Success: How Innovative Companies Are Reducing Churn and Growing Revenue Recurring. Wiley. February 2016 Pg 84
  3. Jump up^ Keiningham, Timothy L., Bruce Cooil, Lerzan Aksoy, Tor W. Andreassen, and Jay Weiner. “The value of different customer satisfaction and loyalty metrics in predicting customer retention, recommendation, and share-of-wallet.” Managing Service Quality: An International Journal 17, no. 4 (2007): 361-384.
  4. Jump up^ Gupta, Sunil, and Valarie Zeithaml. “Customer metrics and their impact on financial performance.” Marketing Science 25, no. 6 (2006): 718-739.
  5. ^ Jump up to:b Morgan, Neil A., and Lopo Rego Leotte. “The value of different customer satisfaction and loyalty metrics in predicting business performance.” Marketing Science 25, no. 5 (2006): 426-439.
  6. Jump up^ Rust, Roland (1993). “Customer satisfaction, customer retention, and market share” . Journal of Retailing . doi : 10.1016 / 0022-4359 (93) 90003-2 .
  7. Jump up^ Oliver, Richard L., Roland T. Rust, and Sajeev Varki. “Customer delight: foundations, findings, and managerial insight.” Journal of Retailing 73, no. 3 (1997): 311-336.
  8. Jump up^ Burnham, Thomas A., Judy K. Frels, and Vijay Mahajan (2003), “Consumer Switching Costs: A Typology, Antecedents, and Consequences,” Journal of the Academy of Marketing Science, 31 (2), 109- 27.
  9. Jump up^ Reinartz, Werner J., and V. Kumar. “The impact of customer relationship characteristics on profitable lifetime duration.” Journal of Marketing 67, no. 1 (2003): 77-99.
  10. Jump up^ International Customer Service Standard (2009), TICSS2009 , The International Customer Service Institute