The Importance Of Payer Retentiontion And Customer Retisfaction
Knowing one selves competencies is essential, a firm should determine which customers it can best serve given its unique set of competencies and merchandise to be offered. A customer retention orientation basically focusses on the existing customer base(book). Retaining customer is an important step of customer relation management (CRM). Strategy of customer retention is used both in contractual as well as non-contractual settings. According to Reichheld and Sasser (1990) a 5% improvement in customer retention can cause an increase in profitability between 25 and 85 %, in terms of net present value, depending upon the industry (Kumar et al 2012). It is since then …show more content…
How much is that customer likely to spend?
III. Will that customer purchase in multiple product categories? o Does the customer mainly purchase from my firm (high share-of-wallet) or from many different firms (low share-of-wallet)? o What is the long-term impact of this customer’s purchase behaviour on firm value?
• What will be the lifetime duration of customer (i.e., when will the customer churn)?
Various studies have been conducted and different models have been developed to answer such questions. Following shows the set of studies that considered the issues. (Kumar et al 2012).
Likewise there are modeling technique which are reviewed to understand the customer retention model comprehensively.
Customer retention and customer satisfaction go hand in hand, they are two important wheels of customer relationship management. Customer satisfaction measurement is one of the most important issues concerning a business organisation which is justified by the customer orientation philosophy and the main principles of continuous improvement of modern enterprises. At present, the importance of customer satisfaction for business organisation has increased because of which it is now considered the most reliable measure as it takes into the account that it provides an effective, meaningful, direct and objective way the customers’ preferences and expectations. Hence, customer satisfaction is considered a baseline standard of performance and a possible standard of excellence …show more content…
It also helps in identifying potential market opportunities. Customer satisfaction measurement may also help the business organisation to understand customer behaviour and specifically helps identify and analyse customer expectations, needs and desires.
The advantages of customer satisfaction measurement survey are enhancement of communication with the total clientele, considering the fact that they constitute continuous and systematic efforts of the business organisation. Business organisations may examine whether the provided services fulfil customer expectations. Furthermore, it is possible to examine whether new actions, efforts and programs have any impact on the organisations’ clientele. Moreover, it also helps in determining the important strengths and weaknesses of the business organisation based on customer’s perception and their