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Customer Loyalty: Five Ways To Make It Stronger

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
You would think that most Los Angeles and Southern California executives would spend the bulk of their time, money and energy on building customer loyalty and supporting customer retention by strengthening existing customer relationships.

It is a commonly accepted fact that it is less expensive and more profitable to retain customers than to try to go out and obtain new ones. Research also bears this out: A study conducted by Bain and Company concluded that it costs between six and seven times more to acquire a new customer than it does to keep an existing one.

In our experiences, though, the right emphasis on customer retention isn’t necessarily the case. Many companies often take their existing customers for granted and spend an inordinate amount of resources going after new business. We’re not saying that prospecting for new customers isn’t important - of course it is. However, prospecting efforts should be balanced out with efforts to strengthen existing customer relationships, build stronger customer loyalty and boost customer retention rates.

In the context of reaching the right customer retention vs. new customer prospecting balance, this article first reviews the three core elements of customer loyalty: customer relationships, customer retention, and customer referrals. The article then recommends five areas in which innovative initiatives have significantly enhanced customer relationships and driven greater customer loyalty: customer service, customer loyalty programs, customer complaints, customer expectations, and customer "touches."

Many Los Angeles and Southern California business executives are missing out on a tremendous opportunity to grow their businesses and increase profits by failing to focus on boosting customer loyalty, customer satisfaction and customer retention. The key is to balance your prospecting and new business development efforts so that you’re spending time, money and effort on both in the right proportion. A formerly-seated chief financial officer - acting in the role of interim CFO, part-time CFO, or project-based CFO - can deliver the CFO services needed to help you find the right balance for your company.

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