Retention and Attrition

Exhibit 6.0   Impact of Retention and Attrition.

“The only profit centre is the customer” — Peter Drucker. Businesses cannot exist without them.

It is many times cheaper to retain a customer than to win one. As depicted in Exhibit 6.0, the longer customers stay the more they spend. And, as companies get to know them, they become more efficient in serving them. They benefit from economies of scale. Their revenue increases, costs decline and consequently profitability soars. Depending upon the industry, a 5% improvement in customer retention can increase profitability by 25% to 85%, in terms of net present value (Reichheld and Sasser, 1990).

On the other hand if customers are unhappy, they tend to go elsewhere. With attrition, revenue declines and cost per customer increases. As profits plummet, businesses are compelled to cut costs, often resorting to retrenching employees. That further de-motivates staff, plunging the company into a vicious downward spiral.

Retaining customers is not only a marketing prerogative, it is a survival strategy. Poor customer satisfaction eventually leads to bankruptcy and closure of business.

This chapter imparts an understanding of how to manage customer satisfaction. It covers a wide array of topics on the subject including the evolution of customer satisfaction, the interplay between employee satisfaction and customer satisfaction, customer loyalty, customer satisfaction measurement, transaction and relationship surveys, drivers of customer loyalty and satisfaction, and the Kano model.

The chapter also provides an overview of customer value management, i.e., the process of creating superior value for target customers and securing an equitable return on the value delivered. Concepts such as customers’ value-in-use and customers’ purchasing philosophy are reviewed here.


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Customer Experience - Visualization

Customer Experience - Visualization

Reporting, analysis and visualization solutions for customer satisfaction research. Example pertaining to a disguised visualization solution for a telco customer eperience study.

What they SHOULD TEACH at Business Schools

What they SHOULD TEACH at Business Schools

Marketing has changed. More so in practical terms, and marketing education is lagging.

The fundamental change lies in the application of analytics and research. Every aspect of the marketing mix can be sensed, tracked and measured.

That does not mean that marketers need to become expert statisticians. We don't need to learn to develop marketing mix models or create perceptual maps. But we should be able to understand and interpret them.

MarketingMind helps. But the real challenge lies in developing expertise in the interpretation and the application of market intelligence.

The Destiny market simulator was developed in response to this challenge. Traversing business years within days, it imparts a concentrated dose of analytics-based strategic marketing experiences.

Dare to Play

Dare to Play

Like fighter pilots, marketers too can be trained with combat simulators that authentically reflect market realities.

But be careful. There are plenty of toys that masquerade as simulators.

Destiny is unique. It is an authentic FMCG (CPG) market simulator that accurately imitates the way consumers shop, and replicates the reports and information that marketers use at leading consumer marketing firms.

While in a classroom setting you are pitted against others, as an independent learner, you get to play against the computer. Either way you learn to implement effective marketing strategies, develop an understanding of what drives store choice and brand choice, and become proficient in the use of market knowledge and financial data for day-to-day business decisions.