The Jungle of Retention
It is up to five times more profitable to spend marketing and advertising money to retain customers than it is to acquire new customers. How is this done?
One solution is to segment your customers accordingly to their value and to the probability of attrition. Customer value can be defined in varies ways depending on what industry the business is operating in. Examples of customer value could be: Profit, Lifetime value and Sales.
Exploring the segments on their characteristic variables may enlighten why some customers are leaving due to the lack of fit between product offers and the type customers in that segment. Having several products the company may chose to build segments for each product in order to optimize the knowledge and fit between customer and product.
Each segment differs in the management decision of the strategy approach and the offers. The illustration below shows an example of this.
