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What are Customer Retention Programs?

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  • Written By: Alexis W.
  • Edited By: Heather Bailey
  • Last Modified Date: 03 December 2016
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Customer retention programs are programs designed to encourage existing customers to remain customers. In the business world, it is a well-known fact that it costs much more to obtain a new customer than it does to keep existing customers. As such, it is essential to keep existing customers happy and returning to the brand or company by offering various retention programs and benefits.

Customer retention programs are very common with cable television companies, cell phone companies, satellite service companies, and other companies who receive monthly payments from customers. For these companies, it is extremely important to maintain their customers, as each customer provides a steady influx of cash. As such, when customers call to cancel, they are generally directed to a special cancellation or customer retention department which has the authority to offer them numerous incentives, such as free premium television service, a discount on their monthly bills, or other incentives to remain a customer.

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Customer retention programs are also important when a customer has a complaint about service. Having a negative encounter or experience with a brand can cause a customer to switch loyalties. As such, companies may try to offer incentives or other benefits to customers who complain or who experience poor customer service to retain or win back their loyalty. For example, a customer who sends a complaint letter is commonly sent coupons for a free replacement product, money back, or some other type of apology and offering to entice that person to remain a customer of the company.

There are also customer retention programs designed to keep happy customers happy and designed to make it worth a customer's while to remain brand loyal. For example, many companies will offer various incentives for buying a certain number of products. A sub shop, for example, may offer to give a customer his tenth sub free after he buys nine subs. The company will then give him a card or some other item to keep record of the number of visits he has and will provide the free item to reward his loyalty.

Customer retention programs are important in business for a company to maintain its customer base. Customer service representatives and staff may be trained on methods of customer retention when a customer calls with comments or complaints. Marketing departments may also develop and devise retention or loyalty programs in conjunction with other marketing efforts.

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