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Viable Customer Retention Techniques

Simple Alliance, Kenya Limited

Customer Attraction and Retention

Your sustainability within your industry is greatly determined by your ability to draw and maintain customers. Some challenging developments could however threaten this ability. For example, you could be pressed to reduce your selling prices by a number of changes within your market. Some key developments that could prompt you to consider reducing prices include:

  • The entry of a low-priced competitor into the market
  • Economic recessions       

The Dilemma

Despite your noble intentions in seeking to cut your prices, you need to note that only a small number of small businesses can successfully wage a price war. This is due to a number of important reasons, namely:

  • Usually, small businesses have limited purchasing and monetary capacity
  • When you lower your prices, your small business normally suffers reduced profits, thus damaged bottom lines   
  • Price wars are unlikely to earn you long-term customers 

Coping Strategies  

To avoid catastrophic reductions on your profits, you need to shelve the price reduction option and to devise suitable ways of drawing and maintaining customers. Some viable customer retention techniques include:

  • Jointly packaging and pricing commodities 
  • Incorporating new services
  • Delivering excellent customer service 
  • Reducing quantity while lowering prices 

Jointly Pack and Price Merchandise

To offer your clients more value, you could categorise related commodities. You then price the product categories at a price that is less than the combined prices of every item but more than the price of one commodity. Customer loyalty is likely to increase due to this customer retention technique.  Through this strategy, you derive several benefits, namely:

  • Increasing your total sales
  • Avoiding permanently lowering your prices    

Reduce Quantity While Lowering Prices 

In case your market demands lower prices, conduct an investigation so as to identify viable price reduction options.  Suitable options could involve reducing prices while cutting product quantities. This approach offers you two key advantages:    

  • It allows you to suitably balance selling price with production costs
  • It makes your customers to think that you have lowered product prices    

Include New Services

You could opt to void reducing your prices while introducing an additional service.  For example, if you deal in motor bikes, you could offer to pay insurance cover for 3 months.  

Offer Exceptional Customer Service 

Even while your competitors are lowly priced, you could justify your higher prices by delivering outstanding customer service. Such service could be in the form of value added frills. By adopting this technique, you benefit by inspiring long-term customer relationships. Some add-ons you could introduce include:   

  • Liberal return terms
  • Free delivery services
  • Longer warranty periods
  • Rapid ordering for frequent clients      

Some situations could prompt you to consider reducing your selling prices. For example, during economic slumps or when better priced competitors enter your market, price reduction could appear to be an attractive option. You however need to note that your bottom line is greatly dependent on your selling price. Your ability to meet your projected returns is pegged on your sales volume. Your sales in turn depend on your customer relationship structure. You thus need to create suitable customer retention strategies.  Certain price cuts could damage your small business’ profitability. For these reasons, you need to search for viable alternatives to price reduction.  Some suitable options include: delivering excellent service to your clients; tying a new service to your products; or packaging and selling products as categories; reducing quantity as you reduce prices. Such client retention techniques are bound to increase customer loyalty to your business.

Copyright (C) 2016, Simple Alliance Kenya Limited

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