Ways to Build Customer Retention
Arthur Middleton Hughes
In a new global business climate, marketing has become a company’s most profitable way of expanding its size and its profits. Developing a broad, loyal customer base is increasingly important as faster media and more available marketing resources allow firms to grab larger and larger market shares of their industry. In this article, renown-marketing theorist, Arthur Middleton Hughes, writes that the loyalist customers are always a company’s most profitable. Because of this, firms should focus their marketing funds and effort towards customer retention, not acquisition.
To do this, Hughes recommends a few of his own marketing strategies. First, show persistence and sincerity in customer relations management. Hughes believes that by contacting customers who have proven interest in a company’s merchandise (i.e. one time purchasers), a company can gain trust by showing that they care about individual purchases and needs. In addition to contacting often, a firm should also make an effort to make each contact a personalized contact- sending cards and offers specifically catering to an individual’s needs. This is best achieved by creating a large database in which customer demographic as well as logistical (sales information) data are stored simultaneously. Hughes also believes that by creating loyalty programs, firms can encourage already loyal customers to stay loyal because the momentum of shifting to a new company would be too great even if the new company offered a better deal.
Finally, Hughes recommends two other tactics for effective marketing: utilizing multi-channel communications and keep records of customer retention rates as a result of differing strategies. Multi-channel media such as the Internet increase exposure at low costs to firms simply because of its speed and convenience. Customer retention statistics can help determine the best set of marketing strategies for a company’s particular set of customers.
Obviously, SPSS software solutions work in the interest of customer retention strategies because they help target the customers that will be most responsive to retention campaigns. Regressions and predictive models help uncover the hidden factors behind retention probabilities and scores. In addition, CHAID software and other probability segmentations can help marketers determine other useful probabilities such as “second selling” probabilities -the probability that a first time or one time buyer will buy another item given the similarities of the products and their purchasers.