Developing a customer retention strategy is one way to keep existing customers content and your new customers coming back for more. In the constant battle to gain new customers, it is easy to overlook the value existing customer relationships hold. Every customer relationship is an asset and has an economic lifetime market value which is determined by taking the average transaction value multiplied by the number of times that customer will transact with the company over a period of time. Devoting all your energies to finding new customers is usually at the expense of the existing customers. It takes more effort to gain new relationships than maintain existing ones.

Mass marketing strategies are useful for positioning and building brand awareness. However, when it comes to building loyalty, customer retention strategies need to be centred around the most profitable existing customer segments, not the entire database. Focussing on the most valuable and highest potential growth customers will have the largest impact on the company’s bottom line, where you can cross-sell and up-sell.

Further topics of interest: ........................................................ Baseline Master Strategy Customer Lifetime Value

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