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Strategies For Reducing Customers Defection

The document discusses 4 strategies for reducing customer defections: 1. Delivery quality services that are better than competitors to increase customer satisfaction. 2. Implement effective complaint handling and service recovery procedures like helping customers via text messages to create a unique customer experience. 3. Increase switching costs through adding value like loyalty programs or contractual agreements to make it difficult for customers to switch to competitors. 4. Implement proactive retention efforts like loyalty programs and reactive retention initiatives like "win-back" programs to intercept defections as they occur.

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deepika tolwani
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436 views3 pages

Strategies For Reducing Customers Defection

The document discusses 4 strategies for reducing customer defections: 1. Delivery quality services that are better than competitors to increase customer satisfaction. 2. Implement effective complaint handling and service recovery procedures like helping customers via text messages to create a unique customer experience. 3. Increase switching costs through adding value like loyalty programs or contractual agreements to make it difficult for customers to switch to competitors. 4. Implement proactive retention efforts like loyalty programs and reactive retention initiatives like "win-back" programs to intercept defections as they occur.

Uploaded by

deepika tolwani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Q4. With suitable examples write at least 4 strategies for reducing customer defections.

Ans- Strategies for reducing customer defections

Strategy 1- Delivery quality


A very important condition in reducing customer churn is to offer one of the best services out there.
If you do this, clients will be very pleased and they will keep asking for your services.
A good way to improve your company’s services is to study your competition thoroughly and keep
track of their service improvements. Once you see improvements worth taking into consideration,
you can add them to your products. Combine the benefits of your services and the benefits of your
competition. This way you can create a new, improved, product that satisfies a larger group of
people and can boost your sales. This is the Blue Ocean Strategy at its best.
Example- Uber Cab has dramatically transformed the picture of the transportation industry by
discarding the nuisance of booking cabs, denial of services, meter issues and unwanted arguments.
Uber devised a new market by the amalgamation advanced technology and modern devices. It tried
to differentiate itself from the regular cab companies and in turn developed a low-cost business
model that offers flexible payments, pricing strategies and generates good revenues for both the
drivers and the company. 

Strategy 2- Implement effective complaint handling and service recovery procedures


Effective customer service can be enabled through
-Frontline staff
-Account managers
-Membership programs
-CRM systems
Even though you win new clients, it’s vital to keep them close to your business. In order to achieve
this, you need a good customer service organization. In a very fast-paced market, your customer
support should keep the pace.
This is how innovative companies are changing the face of customer service through
 In-app help
 Turn reviews into a support channel
 Help customers via text messages
This will helps us to create a unique customer experience. If a customer requests support, you can
text them the information needed. For your clients, it’s a lot easier and it gives them more flexibility.
This is what they are looking for!

Example- JetBlue - Thanks frequent customers with small gestures, Tesla - Meet your customers
where they're at, Zappos - Personally reply to every email

Strategy 3- Increase switching costs

 Positive switching costs (soft lock-in strategies) through adding values.


The key objective of a successful lock-in strategy should help to link your brand with your
customer, establishing a true partnership and the catalyst to build a direct relationship with
your customer base whilst at the same time, it should assist to make it more difficult for the
competition to move into your market space.
Example- Apple who are famous in creating and implementing Lock In marketing tactics
such as Apple putting at the heart of its strategy the iTunes music store which is the only
music player that an iPod or iPhone could access and upload music files.
 Customer Service – US based online retailer, Zappos has re-defined their customer service
experience which could be described as their 'lock-in' strategy by delivering an exceptional
service that users would remain loyal to the brand in their customer lifetime value.
 Contractual and other hard lock-in strategies. E.g. early cancellation fees

Positive switching costs


(soft lock-in strategies)
through adding value
(see loyalty bonds)
– Contractual & other
hard lock-in strategies
(e.g., early cancellation
fees
Positive switching costs
(soft lock-in strategies)
through adding value
(see loyalty bonds)
– Contractual & other
hard lock-in strategies
(e.g., early cancellation
Fees
Strategy 4- Proactive and Reactive retention measures-

 Proactive retention efforts are those service improvements, process enhancements, and


quality initiatives that encourage loyalty primarily by removing the causes of defection in
the first place. In my view, the strongest possible proactive customer retention policy is
simply to offer a frictionless customer experience. You can and should also try to “surprise
and delight” customers, or to “wow” them with terrific service, but these efforts can only be
truly effective once you’ve eliminated the obstacles. Proactive retention could also include a
loyalty program of some kind, along with customized service treatments and the like.

Example- proactive retention strategies include: Increased pre-sale education, Free trial
offers, Extended times for trials and pilots

 Reactive retention initiatives, on the other hand, are those policies and practices aimed at
intercepting customer defections and preventing them, or perhaps reversing them as they
occur. "Win-back" efforts, seeking to re-acquire customers just after they have left the
franchise, are a kind of reactive initiative.
Example-In a business rich in customer data (telecom or financial services, for instance)
an increasingly common kind of reactive retention strategy involves using data to detect the
kinds of behaviors, transactions, or events that are likely to immediately precede defection,
and then actively intervening when you see such patterns developing for particular
customers. This is an analytics-based approach, and those companies that have data-rich
customer relationships can benefit greatly.

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