Is it better to retain your customers or acquire new ones?
We live in a time were organizations constantly strive to differentiate their goods and services from their competitors. Due to technological innovations, customers have access to an immense amount of information about businesses, and the risk of them switching to their competitors is just a click away.
This fact has led many organizations to study and analyze customer behavior. Millions of dollars are spent to understand why people buy products and services, and their particular choices. There are many factors that shape customers’ buying behavior, although sometimes it might seem that there is no reason for certain purchases.
Customer behavior is the study of the psychological processes that customers go through to identify their needs, and how they find ways to satisfy those needs. Their behavior is shaped through various sources of influence.
Research is conducted to determine what goes on customers’ mind, and to identify physical and social influences on purchase decisions. These sources are usually found by marketers in order to increase sales and brand loyalty.
The amount of products and services that are available today on the market make the decisionmaking process harder for customers. Understanding what compels customers to make purchases, helps organizations tailor specific products and sales strategies to giving them a motive for purchasing. The studies of marketers on customer behavior have led to different terms such as customer retention, acquisition, loyalty, experience and customer satisfaction.
Many organizations prefer keeping their customers rather than spending on acquiring new ones. Research shows that the amount of money spent on retention of customers is less than the one needed to acquire them.
For decades, marketing strategies were developed with the aim at acquiring customers, retaining them, and creating customer loyalty. However, the oftenmistaken difference between customer retention and loyalty has led people to confuse the two for the same thing. Customer retention is about preservation, whereas customer loyalty is about growth.
Organizations use retention strategies to preserve the customers that are about to move to the competitor. This is usually done through short-term solutions such as price decrease, or long-term ones such as educating the customers to properly evaluate the product.
Customer loyalty is a result of a consistent satisfactory experience, which leads customers to favor one brand over the others. Loyal customers usually stay true to one brand because of the emotional bond that they create with it. These customers are usually the ones to buy high margin products and services.
In contrary to customers for which retention strategies are used to keep them in business, loyal customers do not leave the business because of one bad experience. However, often customer retention strategies lead to loyal customer. According to Cacioppo article, Measuring and Managing Customer Satisfaction, ‘’a 5-percent increase in customer loyalty can increase profits by 25%-85%.’’
Finally, it is important that companies are customer-oriented as it has proved to be one of the best success practices in the business world. Accommodating the needs of the customers has showed to keep customer retention high and strong customer loyalty. Ultimately, customer loyalty is important for your business as it helps in generating profits and growth.
PECB International is a certification body for persons on a wide range of professional standards. These standards help organizations in setting up an operating culture which leads to efficiency and effectiveness in offering quality products and services.
Implement these standards to build better customer relations, by increasing customer satisfaction through provision of products and services in accordance with customer wants and needs.
PECB offers ISO 9001, ISO 13053, ISO 16949, ISO 13485 and ISO 29001 training and certification services for professionals wanting to support organizations on the implementation of these standards.
ISO Standards and Professional Trainings offered by PECB:
• Certified Lead Implementer (5 days)
• Certified Lead Auditor (5 days)
• Certified Foundation (2 days)
• ISO Introduction (1 day)
Lorika Bina is the Quality Management Systems (QMS) Course Development Manager at PECB. She is in charge of developing and maintaining training courses related to QMS. If you have any questions, please do not hesitate to contact: training@pecb.com. For further information, please click here.
