Dealership sales strategy

What are the Five Factors of Customer Retention?

April 11, 2023
What are the Five Factors of Customer Retention?

It is faster and easier to get your existing customers to make another purchase and repeat purchases rather than find, attract, and convince new customers to make their new purchases. To understand how to draw your existing customers back and back again we have to understand the factors affecting customer retention.

Also getting a new customer, can be 25 times more expensive than keeping a current customer who already makes purchases from you.

1. Product Quality

Product quality refers to how well a product satisfies customer needs. If a Customer is satisfied with the product he will surely repeat the purchase rather than buy from someone else. While evaluating the product we have to consider several key factors including whether a product solves a problem, if it works as needed or if it fulfills customer needs.

Research conducted by Morgan Stanley showed 92% of Apple iPhone users eventually plan to upgrade to the new versions. This customer behavior is the main success of a companies with strong brands and quality products.
We can also take the example of Netflix, where 2/3 of its customers subscribed to the higher plan more than a year after their initial sign up. The common factor of success for those two companies is their high-quality and constantly improving product.

2. Offer Competitive Pricing and Discounts

It’s no secret that customers love shopping around for the best deal. By making sure your prices are competitive and/or you offer discounts, you can be sure that your customers will be coming back.

Offering competitive prices and giving attractive discounts comparatively to market trends is another key factor to attract old customers to buy again. Psychology wise – discounts always attract customers – that’s why this is one of best and most popular marketing strategies.

If you want to stay ahead of your competition, you have to work on competitive pricing and discounts. If your deal is better than the others, you have bigger chance to stay ahead of them.

To ensure you remain competitive, you can keep track of customer reviews and competitor data – and adjust your pricing accordingly. You should also consider loyalty programs and special offers for new and returning customers. That way they feel they’re getting a good deal while staying loyal to your business.

3. Convenience and fast deliveries

As we know the majority of today’s buyers want are looking quick and easy delivery options. They like having a range of options, including none other than free delivery or fast delivery respectively. The best way to meet this criteria is to back up or cooperate with multiple carriers.

Mind the following while considering the delivery options to offer.

  • Partner with Local Service Providers
  • Analyze the market options first to learn what delivery options your customers are more comfortable with.
  • Use shipping tiers as an upselling opportunity
  • Display available delivery options on product page
  • Always Share the tracking code with your Customer so they have constant overview of delivery process.

4. Loyalty Perks

Loyalty programs are central to customer retention. 65% of consumers admitted to joining loyalty programs of the brands they like – so its time to start engaging with customers and reward them for returning. Continuous reward-systems that offer loyal and returning customer advantage over new customers, is something that can greatly increase your customer retention percentage.

While you can offer various discounts and gifts in your loyalty and retention program, it’s also worth adding exclusive perks, like early access for the loyal customers. Increasingly more customers expect early access to new products and personalized recommendations.

5. Dedicated Customer Service Team

Dedicated and personalized customer service can make or break the customer retention process. While most companies try to digitalize and automate customer service process, you can stand out and offer personalized human connection. Most customers are relieved when they contact a customer service and they hear human voice instead of robot.

Every customer service department needs to look at these main key factors.

  • Provide Product Information
  • Human connection is must
  • Resolve any emerging problem
  • Guiding them to their needs
  • Handling complaints
  • Friendly attitude
  • Strong time management


In conclusion, if you want to retain your customers and build a strong relationship with them, you have to consider these 5 given factors.

The business must take care of customer’s needs, resolve any problem they are facing and guide them to the best possible solution. This kind of approach gives customers impression that they won’t forget and they gladly come back for another purchases in the future.

Customer retention is an outstanding investment that businesses can make for their long-term success.

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