Customer Loyalty and Satisfaction
April 3, 2025
Most of the organizations have murkiness in considering customer loyalty and satisfaction. They feel that both are same and a satisfied customer is always loyal to them. But this is not true as the customer can be delightfully satisfied but he may be or may not be loyal. This is because satisfaction an emotional and…
When customers end up his relationship with suppliers, he breaks the loyalty with him. Following are the reasons which are responsible for loyalty break ups: Customer dis-satisfaction: Customer dissatisfaction is the primary reason that results in breaking up the continued loyalty with the supplier. Most of the unsatisfied customers try to find more prominent alternatives…
Every supplier wants to create and retain a loyal customer who engages in continued profitable business with him. Customer Loyalty is the measure of success of the supplier in retaining a long term relationship with the customer. Thus customer loyalty is when a supplier receives the ultimate reward of his efforts in interacting with its…
Following are some important methods and tools for customer retention:
Database could help in tracking and moderating all the interactions that a customer is indulged in with the supplier. However, the interaction with customers or prospect customers do not generate any revenue for the organization but it important to monitor it as it may return a potential profit in the coming future. This database is normally linked with a CRM system which helps the supplier to identify the reasons for customer defect and also to analyze the possible strategies to overcome it.
Take an example of a loyal customer who spends $10,000 per annum with an airline to travel for business reasons. Now this customer is having a bad experience with the airlines due to many delayed or cancelled flights or bad service provided by flight attendants. This customer could be on an urge to defect due to the overall negative experience.
If the airlines does not implement strategies to save this defect or identify if the customer is vulnerable for defect then it may decrease customer retention. For overcoming this problem the airline should implement a sophisticated CRM database system to analyze the data and determine the change in buying trend of all the customers. It will also help the organization to identify the dissatisfaction sources of customers so that business tactics could be implemented to retain them efficiently.
Deciles are nothing but the top grouping of customers which are ranked high according to the purchases they have made in a given period of time. The deciles percentage is normally 10% or 5% or even 1%, sometimes depending upon the organizational strategies.
These deciles alone are responsible for 60 % to 80% of sales and profit. Hence, after determining this range of customers it becomes easy for the organization to determine which customers are profitable and which are not. After this, retaining strategies could be implemented to retain valuable customer.
Recency means customer purchase in recent time, Frequency means what is the frequency of purchase and Monetary value means how much the customer is ready to spend.
These three aspects are determined by creating an RFM matrix and putting all analyzed data and information inside this matrix. This technique is very important to characterize customers according to their buying habits so that according strategies could be implemented to retain them.
According to the above strong statistics, if the customer recency is more than the first statistic, then the customer is more likely to divert. Hence after identifying this possibility of defection it becomes easy to retain the customers.
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