Retention Value
Retention value is the return on retaining a customer. Retention value is calculated by subtracting the cost of retaining a customer from the profit the customer brings a company. The cost may include, for example, making an offer or resolving a complaint. Retention value can be either positive or negative.
Marketing is primarily aimed at acquiring new customers and increasing sales. When many customers leave a company after some time you can speak of mopping the floor with the tap is. Hence, most companies rightly pay attention to customer retention and the part of the customer journey after the initial purchase.
Retention efforts obviously come at a price. This applies to both general activities and efforts aimed at retaining an individual customer. A very dissatisfied customer is more likely to leave and, in many cases, a greater effort will have to be made to retain him.
Determining the retention value maps out which customers are the most profitable for making extra efforts aimed at retention or renewal. This in turn helps in making choices and implementing (or not) actions aimed at customer retention.
