Enforce Customer RetentionAnalyzing Firms
A great way to ensure that business is created for a firm in the future is by creating a real or artificial obligation for them to continue dealings with the company. These are known as customer retention strategies, and they ensure that profits are made in the future. How does this occur? They simply obstruct the ability to stop comfortably doing business with the firm. This is quite common and easier than it seems.
Customer Retention: Long Term Contracts
Long term contracts force customers to use the firm’s product or service for an extended period of time so the firm is guaranteed money. This is most effective when there’s a cost for canceling the contract or a large inconvenience. An example is switching network providers for a service: customers may experience downtime and be forced to pay for breaking a two-year contract for a variety of services. Customers may have to learn to use the new service or product, which wastes time. They may have purchased other services or products which supplement this one. Lastly, they may have to incur all of these downsides together. The result is customer reliance on the provider.
Customer Retention: Force Reliance
A firm can also make its system unique to itself, and incompatible with others. This forces the customer to stay if it’s part of a network by forcing reliance. This example is readily identified in cellular technology. They cannot use the vast majority of phones provided by Sprint or Verizon on T-Mobile due to technological differences. They are incompatible, and they will be forced to purchase a new phone to switch. This orients them towards making choices between alternatives or forces them to get both for complete compatibility.
Any inconveniences created by leaving the firm help customers remain with the firm. This guarantees the firm will retain profits and is a strategy often employed to ensure customer retention.
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