Both parties in the customer firm relationship can benefit from customer retention.This is,it is not only in the best interest of the organization to build and maintain a loyal customer base,but customers themselves also benefit from long term associations.
Benefits for Customers:
Assuming they have a choice,customers will remain loyal to a firm when they receive greater value relative to what they expect from competing firms.Value represents a trade off for the consumer between the components.
Confidence Benefits:
Confidence benefits comprise feeling of trust or confidence in the provider along with a sense of reduced anxiety and comfort in knowing what to expect.One customer described his confidence that resulted from having developed a relationship with a service provider.
Social Benefits:
Over time,customers develop a sense of familiarity and even a social relationship with their service providers.These make it less likely that they will switch,even if they learn about a competitor that might have better quality or a lower price.This customer's description of her stylist in a quote from the research just cited illustrates the concept of social benefits.
Special Treatment Benefits:
Special treatment includes getting the benefit of the doubt,being given a special deal or price,or getting preferential treatment as exemplified by the following quotes from the research.
Benefits for Firms:
The benefits to organization of maintaining and developing a loyal customer base are numerous.In addition to the economic benefits that a firm receives from cultivating close relationships with its customers,a variety of customer behavior benefits and human resource management benefits are also often received.
Economic Benefits:
Research reveals that over the long run,relationship-oriented service firms achieve higher overall returns on their investments than do transaction oriented firms.These bottom line benefits come from a variety of sources,including increased revenues over time from the customer,reduced marketing and administrative costs,and the ability to maintain margins without reducing prices.
Customer Behavior Benefits:
The contribution that loyal customers make to a service business can go well beyond their direct financial impact on the firm.The first and maybe the most easily recognized,customer behavior benefit that a firm receives from long term customers is the free advertising provided through world of mouth communication.
Human Resource Management Benefits:
Loyal customers may also provide a firm with human resource management benefits.First,loyal customers may,because of their experience with and knowledge of the provider,be able to contribute to the co-production of the service by assisting in service delivery.often the more experienced customers can make the service employees job easier.
