In the competitive market scenario of today, attentive customer service is the basis of any solid business. It is estimated that it costs nearly six to thirty times more to get a new customer than it does to service and maintain the loyalty of an existing customer. Businesses often struggle to cut costs without realizing that customer retention is the key to a healthy bottom line at the end of the day.

In fact customer attrition is the single largest cost for many businesses. Management gurus say that keeping customers happy has the same effect on the bottom line as cutting costs. In fact simply by increasing your customer retention by 5%, you could increase your profits by at least 25%.

The key to customer loyalty and retention is to consistently deliver a level of customer service that exceeds your loyal customer's expectations for value. Good customer relationship starts with customer care.

Customer retention is directly related to the quality of your customer relationship management. The customer must feel good about doing business with you and going back to you. Most forward looking companies looking to thrive in the 21st century scenario are investing in customer service training programs and customer relationship management with a sharp focus on building customer satisfaction, and customer retention with every experience.

What do businesses today gain by becoming more sensitive to the benefits of customer retention and cultivating the existing customers? Customers are worth keeping because of the many roles they play in the company’s portfolio. A loyal customer not only buys company products but talks favorably about the company & its products, and pays less attention to competing brands. A loyal customer many even offer product /service ideas to the company, and more over it costs less to serve an existing customer than new customers.

In today’s competitive scenario, Customer retention is a cost effective and necessary part of corporate strategy. It has been found on an average 80% of sales come from just 20% of customers. Let us consider for example the wireless telephone or cellular phone companies. Current marketing strategy shows a disregard for customer retention. If a buyer signs up for a new connection he or she is given a hefty rebate or even a free cellular telephone. However there are no such freebies for a current customer who has to pay the full price.

There is a need to rethink marketing and sales strategies, as after all as marketing experts opine it's five times more profitable to spend your marketing budget for current customer retention than to acquire new customers. This type of promotion goes against the idea of customer retention and is loaded against the loyal current customers. In fact the stage is perfect for the loyal customer to seek the lucrative packages being offered by the competition.

There is therefore a need to revisit our marketing and sales strategies. In the opinion of most marketing experts, it's five times more profitable to spend the marketing budget on retaining current customers than on attracting new customers.

In the years gone people didn’t realize the importance of focusing on customer retention. The trend was to stick to the helpful and friendly neighborhood shops and corner grocery stores. There was a personal and friendly touch to the relationship and we stuck to the grocery store through thick and thin. The store too didn’t fail us. We couldn’t even think of shopping from another store.

Times have changed. We now have larger stores, and the importance of customer retention and building relationships with individual customer is largely ignored by the impersonal sales personnel manning the counters of the modern day malls and supermarkets. They don’t have the time or sense of belonging to invest effort into building a relationship with the customer. Customer retention is sadly not in their list of priorities.

Of course, many people also have moved to the convenience of the Internet and secured electronic payments and do a large portion of their shopping online. Your identification for the store ends with your email address. The personal relationship of the days of yore no longer exists and customer loyalty has become as temporary as the flick of the electronic mouse.

Today, virtual storefronts are unable to use the advantage of customer retention in the same ways as in the past. Technology too has progressed at a fast pace.

Specialized firms can use today’s sophisticated technology and database equipment to aim at customer retention using the database marketing programs. By establishing a detailed client database, large corporations establish a detailed client data to keep track of personal information and individual preferences of their customers. This database helps the corporations to reach out to their customers.

The owner of the corner grocery store in our example quoted before probably kept the details of about 250 customers in his grey cells. The large superstore today can keep in touch of say 25,000 customers through its own customer database. In fact with effective implementation of customer databases will enable the companies to establish contact with its customers. This will enable it to work towards increasing customer retention and ensure repeat sales and customer referrals.

Itmust be remembered that the entire campaign of customer database and customer retention programs, should be designed with the customer in mind. The exercise will only be useful if the customer associates value with being a part of your database.

How do you offer value? Here are some ideas:

a) Membership cards and programs which entitle customers to special offers and discounts.

b) Welcome, sales recognition, and thank you statements.

c) After sales satisfaction surveys and technical support.

d) Invitation to special events organized by your company.

If the customer does not perceive value in your customer retention program, all your corporate communications including coupons and special offers are likely to be discarded as junk mail. In today’s internet driven world, consumers have to routinely deal with a daily deluge of junk mail and its best to invest your campaign with focus, meaning and value to stand apart from the crowd.