Consultant Consortium, Linked In 6/18/13 enhanced by Peter/CXO Wiz4biz 6/14
2. Employee Retention increases due to job pride & satisfaction – which in turn creates a loop that reinforces “Customer Retention” through friendliness and better service to the customers. Customers like doing business with people they know and your employees want to do the right things because it makes their job easier and far less stressful.
3. Profits Increase, as costs go down & revenues go up. Improved profits provide resources to invest in employee development & compensation (further increasing retention), and in new product features & new products that give Customer’s better value. Profits are important – not just as an end in themselves. They also allow the organization to improve value, by providing additional incentive & reasons for employees, customers, & investors to remain loyal to your organization.
4. Creating Loyal Customers, significantly reduces the cost of getting new business [The average cost to get a new Customer is 10x retaining an old one]. Therefore, costs begin to shrink as the expense of acquiring & serving new customers and replacing old customers declines.
This Loyalty Model effectively provides insight into success versus failure in any organization. It is clear that the companies or organizations with the highest retention rates (retention of “loyal” Customers), also earn the highest profits & maintain long-term viability. As mentioned earlier, loyal customers reduce cost. In one study, it was found that in most service organizations “word of mouth” advertising accounted for 1/3 to 1/2 of all new customers. Relative customer retention also explains bottom line implications better than market share, scale, cost position, or any variables usually associated with a competitive advantage.
What can you do? differently for your business? Perhaps a good place to start would be to find better ways to create & sustain a loyal customer base. While there will be an investment of time or other resources, the advantages will be enormous for your customers, employees, & investors. Strictly from a financial perspective, the Revenue increase from improved service to “loyal” Customers, tends to be 10 to 20 times the costs associated with acquiring new Customers. What strategies do you need to implement today, to get these results?
Comments: Do you have any ideas – of what can be done – to increase Cust Loyalty?