MGT3003

Customer Rela onship Management

Ar cle Review

What Is Customer Reten on? Importance, Metrics &

Strategies

GROUP-11 TEAM MEMBERS

B.PHANINDRA SAI - 19MIA1065
S.ANJANA - 19MIA1078
K.PRINCE - 19MIA1079

FACULTY
Name: R B EASWARAN
Slot: B1+TB1

ti

ti

ti

Introduction:

Customer retention is a business’s ability to keep existing customers

and continue to generate revenue from them. Companies use different
tactics to convert rst-time buyers into repeat shoppers. In other words,
customer retention allows a business to increase the pro tability of an
existing customer and maximize its lifetime value (LTV).

Customer retention is important for businesses because retaining

existing customers is typically less expensive than acquiring new ones.
Additionally, retaining customers can lead to increased revenue through
repeat sales and positive word-of-mouth marketing. By understanding
and addressing the needs and concerns of their customers, businesses
can improve customer loyalty and retention. Articles about customer
retention can provide valuable insights and strategies for businesses
looking to improve their retention rates.

Title of the Article:-“What Is Customer Retention? Importance, Metrics

& Strategies” 

Author:-Austin Caldwell

About the Author:-

The author of this article is Austin Caldwell, who has 13+ years of
combined product marketing and digital marketing experience in the
software and eCommerce industries. As the Director of Product
Marketing, Austin drives the go-to-market strategy for Oracle NetSuite’s
CRM, commerce, professional services automation, platform
infrastructure, and customer success solutions.

Customer retention plays a very important role in a company as by only

this we can understand the company's success and the behaviour of
products or services in the market.

Think of customer retention as a process where a business aims to

convince existing customers to keep purchasing their products or
services. Since a customer has already made a purchase, it’s different
from lead generation, which involves capturing the contact information of
businesses or individuals who are likely to buy a product or service.
fi
fi
Instead, customer retention is focused on existing customers. The goal
is to increase repeat purchases by building customer loyalty through
excellent customer service, product value, and a distinct advantage over
similar products or services.

The purpose of this article is to provide businesses with strategies and

real-world examples of how they can effectively manage and improve
their relationships with customers to increase retention rates. These
articles typically discuss various CRM techniques and tools that can be
used to gather and analyze customer data, identify key customer
segments, and develop targeted retention campaigns. They may also
offer case studies or examples of companies that have successfully
implemented CRM-based retention strategies. By providing businesses
with actionable tips and real-world examples, these articles aim to help
businesses improve customer retention and ultimately drive revenue
growth.

The article is written in a very informative way. It tells why customer

retention is very much important and how it affects a business and the
strategies to increase it and how to achieve great customer retention
using customer relationship management systems, and nally how to
choose a great CRM software for making better decisions in your
business and increasing customer retention.

In this article, the author tells about the role of customer retention in
businesses in different ways all that information is shared here in point
wise:
1. he explained why customer retention is very much important for the
business to stay healthy in the market and to achieve big.

2. he explained the difference between customer acquisition and

customer retention. where customer acquisition is used to get new
customers for the company, and customer retention is used to gain the
trust and loyalty of the customer to make him visit repeatedly.

3. he explained that at the early stage of the company. they should be

focusing on customer acquisition and getting more customers. when
they are established largely they should be focusing on customer
retention to make them loyal and gain their trust.
fi
4. he explained the main bene ts of customer retention:
1. Increased pro ts- most of the companies would be generating
revenue only from their existing customers. He explained it using a fact
of revenue by some companies
2. lower costs: it is more than 5 times cheaper to retain an existing
customer than to get a new customer.
3. increased average order value: repeat customers are likely to
spend more compared to new customers.
4. he mentioned that word of plays a huge role as loyal customers
will be giving positive reviews to other customers which will lead to more
customers.

5. he mentioned some customer retention statistics to show proof that

customer retention is very much useful for a company to bene t.

6. He explained some key metrics for measuring the customer retention

rate of their companies which are:
1. Attrition rate formula
2. Customer retention rate formula
3. Repeat customer rate
4. Purchase frequency
5. Average order value
7. he gives some customer retention examples like personalized email
campaigns, educating them about their products and giving free
appointments to experience their products, or giving free services to
tests related to their products.

8. he explained that customer retention rates vary differently by industry

and media and professional services industries have 84% which is the
highest and retail and hospitality, travel, and restaurants have 64% and
55% respectively. Because of the many options in the travel and hotel
industry customers tend to try new services. Finally, he proves that
different industries may have different customer retention rates.

9. he gives the main strategies to improve customer retention 

1. engage with customers: marketing channels, social media
marketing, and email marketing and make them feel as if they are part
of the brand.
fi
fi
fi
 2. reduce friction in purchase powers: make the process of buying
your products easy. Make your apps and website purchases seamless
and fast as the consumers don’t get frustrated and make their
purchases effortless
3. improve customer support: make your customer support pages
and call centres effective so the consumers to clarify their doubts and
problems easily and build trust.
4. create a community: create online and of ine communities
where your customers and company representatives can interact with
each other. By this, loyalty and trust may increase.
5. start a loyalty program: Loyalty programs can be a great way to
motivate existing customers to make additional purchases at a higher
frequency. Ensure that your loyalty program has rewards that existing
customers would nd valuable, like free products or signi cant
discounts.
By this strategy indicated by the author, the businesses will get more
value to their company.

10. Finally for all these views and tips by the author to evaluate and to
build trust and loyalty the company must take great decisions. By using
a customer relationship management system the company can track
customer buy history and order information. With all this info the
company can seamlessly give them personalized offers and make them
part of the company

By stating that customer retention is vital in any business author gives

some real-world statistics to prove that they are important:
1. Poor customer service would convince 39% of people never to
use a company again and 37% to change suppliers, according to
research from new voice media
2. Temkin Group found that 77% of customers would recommend a
business to a friend after having just one positive experience.
3. It takes 12 positive customer experiences to make up for one
negative experience, according to Ruby Newell Legner’s “understanding
customers
fi
fl
fi
Strengths of this article:

1. the author brie y explains why customer retention is overmuch

important for any business. and when a company should focus on
customer retention.
2. he mentioned the bene ts of customer retention with proof of the
other company's values.
3. he gave some original statistics of companies that are highly
improved by customer retention with the surveys.
4. he clearly explained different types of methods to measure customer
retention rate with the formula and an example.
5. he gave brief examples by which the reader can easily calculate the
customer retention rate for any company.
6. he also gave some theoretical examples of by which campaigns and
marketing customer retention may increase greatly.
7. he also mentioned that customer retention may vary by industry.
8. Rather, with all this info, he also gave a free customer retention
software that can be used for their business to track any consumer and
give them personalized recommendations and offers.
9. In all forms this article stands as best due to all validations to his
statements and also for proven tips and methods to apply for their
business.

Limitations of this article:

1. The author didn’t fully elaborate on the drawbacks that will be
affected while performing his strategies.
2. The author didn’t give any precautions and risks that will be
affected if the company does not perform the strategies mentioned.
3. He gave all the real-world cases for positives and the companies
which did well in this customer retention but not the companies
which vanished due to lack of customer retention.

Conclusion:
The author of this article wrote it in a well-managed way that anyone
should understand the value of customer retention in any business. He
started by de ning it and then gave some bene ts of it and then
practically showed how to implement and measure customer retention.
Then he gave core strategies for customer retention which should be
followed by every industry, nally, he ended by recommending a free
fi
fl
fi
fi
fi
 customer relationship management software through which businesses
can achieve maximum customer retention.

Based on the information provided, this article that focuses on customer

relationship management and provides strategies and real-world
examples of the effects of customer retention can be considered to be of
high value to businesses. This article can provide valuable insights and
actionable tips for businesses looking to improve their retention rates.
They can help businesses understand the importance of customer
retention, the bene ts of effective CRM, and the speci c strategies and
tools that can be used to increase retention. Additionally, the inclusion of
real-world examples can help businesses better understand how to
apply these strategies in their contexts, making the information more
relevant and actionable. Overall, such articles can be considered a
valuable resource for businesses looking to improve their customer
retention rates and drive growth.

In the future, customer retention is likely to become an even more

important focus for businesses as competition increases and the cost of
acquiring new customers continues to rise. One trend that is likely to
continue is the use of data and technology to personalize the customer
experience and make it more convenient and ef cient. This can include
things like predictive analytics, personalized marketing campaigns, and
the use of chatbots and other AI-powered tools to improve customer
service. Additionally, companies will likely place more emphasis on
building strong relationships with customers through engagement and
loyalty programs, as well as fostering a sense of community around their
brand.

Ar cle Link:

h ps://www.netsuite.com/portal/resource/ar cles/crm/customer-
reten on.shtml
tt
ti
ti

fi
ti
fi
fi