CUSTOMER RETENTION

The overall victory of a creation hinges not on the original sale to a customer, but on constant sales to that equivalent customer. Simply put, a company makes the most earnings when its client base has a long-term promise to manufactured goods. The reason long-term, loyal clientele make the most profit for a corporation is that the cost of acquire new clientele is high. Therefore, if a corporation can obtain a customer and then turn that client into a long-term, loyal purchaser, the company's initial speculation in acquire that customer pays off. Further, companies are conscious that not only are loyal clientele the most gainful ones, but they are also the most believable source of advertising: for some harvest and services, more than half of all new business is the consequence of word-of-mouth customer referral.  Hence, a company should want to enter into a long- term connection with every client.

An important measure connected to customer retention is life- time value of a customer. Marketers use LVC to resolve how changing the length of a relationship with a customer affects the company's substructure. For example, suppose an Internet service supplier is bearing in mind giving one month of free examination to each client who renews his examine for a year. In evaluate whether the plan increase profits, marketers consider not only the likelihood of clientele signing up for the extra year, but also the likelihood of clientele retaining service for years beyond. If customers display no loyalty from year to year, the encouragement may be a bad idea. On the other hand, if clientele are much less likely to change repair if they have been content with their service for more than two years, the promotion is almost certainly worthwhile. Customer approval, then, is a vital component of LVC.