The Value of Customer Retention in Marketing

The Value of Customer Retention in Marketing

Customer retention is not only a cost effective and profitable strategy, but in today’s business world it’s necessary. This is especially true when you remember that 80% of your sales come from 20% of your customer and clients. Taking these statistics into consideration I wonder why most marketing and sales campaigns are designed for the new customer.


Perhaps we need to rethink our marketing and sales strategies, after all many experts will tell you that it’s five times more profitable to spend marketing and advertising dollars to retain current customers than it is to acquire new customers. In years past the importance of focusing on customer retention was not as important, stickiness came naturally. We shopped in our neighborhood shops and our corner grocery stores. We had a personal connection with our service providers and the thought of shopping at another store would have never crossed our minds.


That has all changed now. Our stores our larger, the majority of the sales personnel don’t know that you even exist. Not to mention that now we have the convenience of the internet and do a large portion of our shopping online, where you are known by your email address. As a result, customer loyalty has disappeared and large corporations and virtual storefronts are unable to ask the millions of disloyal customers what caused them to stray.

However, there is a solution. Sophisticated technology and database equipment has made it possible for specialized firms to make attempts at customer retention through database marketing programs . Establishing a detailed client database will allow you to keep track of personal information and individual preferences of all their customers. This enables you to provide better service and value. Just like the corner grocery store owner kept information on 200 customers in his head, the large superstore can now keep track of 20,000 customers through its customer database. With effective implementation of customer databases, you will be able to re-establish contact with customers, and work successfully towards increasing customer retention, repeat sales, and customer referrals.

To achieve the objectives of the database and customer retention programs, the entire campaign should be designed and carried out with the customer in mind. The exercise will only be effective if the customer recognizes and associates some value with being part of your database. If they do not perceive value in your program all of your communications, coupons, special offers, and newsletters will be discarded. Your customers have been inundated with meaningless “junk” mail and email spam, so embed your campaign with value.

A few value-add strategies that you can use include:

  • Membership cards and programs that entitle your customers to special offers, discounts, or preferential treatment.
  • Welcome, acknowledgement, sales recognition, thank you statements.
  • After sales satisfaction and complaint inquiries and surveys.
  • Event oriented communications in which the customer is genuinely interested.
  • Enhanced and empowered customer, after sales, and technical support.

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Simon Page College of Marketing Eshun
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