Question

enhancing and optimizing customer retention and loyalty is a major business strategy . Explain why , and list two example of companies which follow this strategy.

Answer 1

Enhancing and optimizing customer retention and loyalty is a major business strategy.

Businesses get customer either through new customer acquisition or retention of existing customers.

No matter how good is your product you get at least break even level revenue from customer retention only.

Customer retention and loyalty thus makes the base for business over which you tend to increase business by getting new customers.

Studies show that the money spent for getting new customers is much higher thus making the return on investment very less. For the existing customer, investment is very less.

Loyalty is important as your customer don't doubt your products and thus keep buying even if there are price rise or any other basis changes.

Your loyal customers become your advocates thus you get a source of marketing without paying for it.

Customers -> Clients -> Advocates

Also your loyal customer will provide you the essential feedback needed to keep improving over the time.

Examples ->

1. Amazon

Whenever you will log in to your amazon account, you will get suggestions of products to purchase based on your earlier purchases.

Also, you will get suggestion of products that you purchased earlier. Sometimes with better deals thus retaining you as customer.

2. Starbucks

Starbucks also follow customer retention policy. They use customer rewards program to retain their existing customers.

Customers can get free food and drinks as per this program thus motivating them to come again and again.