What is Customer Satisfaction ?
February 12, 2025
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Following are some of the important strategies that should be implemented for increasing customer retention:
By taking an example of organizational customer service we can easily compare the above two strategies. The organization could endow their customer service executives and allow them to take quick actions with regards to customer queries and problems. This may lead to increase retention rates without incurring any cost. But if the organization enhances retention spending by rather adding more customer service executives, queries and problems could be more quickly materialized and hence increase retention rate vastly.
However, cost sensitivity of a customer substantially depends on condition of the market.
For example if a product becomes extraordinarily famous and demanding in market and every customer is tending towards capturing this product then it becomes necessary to focus on technological aspects rather than focusing on the cost. If they do so then the cost sensitivity of these customers is least.
Similarly if a product becomes common in market due to emerging competitors coming up with similar but more prominent products, then in this competition the value of the product decreases and the companies become rarely bothered for them.
In this scenario the customers have the right to become highly cost sensitive as they know that they can negotiate with the suppliers to a greater extent.
Many customers are very price sensitive and have the tendency to defect if the Gym increases future membership price. If the Gym also provides the renewal cost to be as low as introductory price then they have a better chance to retain these price sensitive customers. But by doing so they are in risk of loosing high valued customers who prefer best services and less surrounding crowd.
In this case the Gym must implement the strategy to continue taking high membership renewal cost. This process may lead to most of the low value customers to defect but the total profit in retaining the high value customers will be always more. This also helps to uplift the image and status of the Gym by providing best services to its customers which results in acquiring and retaining more high valued customers and generate good profit.
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