5 Factors That Influence Customer Retention

Customer retention refers to the ability of a company or product to retain its customers over a specified period.

Having a high customer retention means customers of the product tend to continue purchasing the product and is extremely memorable and liked by them!

So what influences customer retention? There are five factors:

Product Quality or Perceived Quality

Brands want consumers transactions to be easy and effortless, and in order for that to occur, companies must reduce friction.

This can be done through high levels of personalization. For example, Netflix and their recommendation system. Their system looks at the viewers browsing history and viewing tendencies and recommends movies and shows to watch. Because Netflix's recommendations are so good, people keep coming back and using the platform!

Product Engagement

This deals with frequency and intensity at which your customers use the product. The more engaging it is, the more likely people are to come back.

Relationship Quality

This includes a dedicated and high level of customer service!

Branding

Proper branding and marketing can help your brand increase the value of your offerings! It also allows companies to distinguish themselves from competitors.

This includes brand separation, which is clearly positioning your brand. This helps consumers assess if they would consider buying your brands products/services.

Switching Costs

Switching Costs your customers a fortune to switch to a competitor, it will be less likely for them to do so. But you have to be aware that if the quality of the product deteriorates, consumes will ignore the switching cost and move to competitors!