What the Case of Amazon s AI Powered Recruitment Tool Means for Other Corporates
The Pervasive Use of AI Powered Recruitment Tools Increasingly, many large and medium sized as well as small businesses are turning to AI or Artificial Intelligence powered algorithms and software in their HR or Human Resources processes. Whether it is recruitment where AI driven software “parses” through the mass of resumes in a jiffy and […]
Medium of Customer Responses
The responses can be provided through any of the following media: Face to Face Interaction – Face to face interaction is the most efficient medium and provides the probability to judge the emotions and body language of the respondent. When a customer visits the supplier’s premises and supplier receives him respectfully and spends some time […]
Six Sigma and Quality Management
Six Sigma is a business management strategy which aims at improving the quality of processes by minimizing and eventually removing the errors and variations. The concept of Six Sigma was introduced by Motorola in 1986, but was popularized by Jack Welch who incorporated the strategy in his business processes at General Electric. The concept of […]
Different Types of Online Business Models
Almost all startups being funded nowadays have an online business model. This is the reason why they appear to be similar to each other. However, this observation is a flaw in the thinking of the untrained observer. Not all online business models are similar to one another. There are many varied forms of models that […]
Job Description & Job Specification – Definition and Purpose
Job Analysis is a primary tool to collect job-related data. The process results in collecting and recording two data sets including job description and job specification. Any job vacancy can not be filled until and unless HR manager has these two sets of data. It is necessary to define them accurately in order to fit […]
It is difficult to exactly define customer retention as it is a variable process.
A basic definition could be ‘customer retention is the process when customers continue to buy products and services within a determine time period’. However this definition is not applicable for most of the high end and low purchase frequency products as each and every product is not purchased by the customer.
For example in the stock brokerage industry, a customer may not buy a particular scrip in the given period of time but is tended to buy the same when the conditions to buy the scrip becomes favorable and when the customer evaluates that now this scrip could be profitable to buy.
In this case the definition of customer retention could be ‘customer retention is the process when customer is intended to buy the product and services at next favorable buy occasion’. These products are called as long purchase cycle products.
In some scenarios customer’s buying intentions cannot be determined with respect to financial aspects. For example, some magazines are available online for free and there are no intended charges to read these magazines.
A reader who is frequently reading every edition of magazine online could be considered as retained customer as through his intentional behavior he shows the magazine company that he likes the magazine content and he tends to maintain a valuable relationship with the company. Hence this magnifies one more aspect in customer retention definition that revenue is not the deciding criteria that indicates that the customer is retained or not.
Customer retention highly depends on attrition and silent attrition rates. Attrition is the process when customers no longer want to use product and services provided by the supplier and breaks the relationship bond by informing the supplier that he will be no more a customer.
Most of the defecting customers don’t even intimate the supplier that they are defecting. This process is called silent attrition where the customer stops purchasing the product and services and divert to other suppliers without even informing them.
During attrition, organization should prepare serious customer retaining strategies to save the customer to defect. It is often seen that if these corrective measures are implemented successfully to save defection then retention level increases to a much higher level as compared to a normal retention process.
Silent attrition causes the real damage to the organizations because they do not even know when the customer defected. They find no time to implement the corrective measures to try retaining that particular customer or even determine if the customer can be retained or not.
Customer retention does not make sure that the customer is loyal.
For example, a brokerage firm has both traditional trading platform and online trading platform. A customer has his trading account in traditional platform but after some time he feels to switch to online trading platform. Now in this situation, the customer is not considered to be loyal to the given services, but the customer is said to be retained by the same organization.
Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this is only possible when there is a quality relationship between customer and supplier.
Usually a customer is tended towards sticking to a particular brand or product as far as his/her basic needs are continued to be properly fulfilled. He/She does not opt for taking a risk in going for a new product.
More is the possibility to retain customers the more is the probability of net growth of business.
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