Impact of Direct Marketing to Customer Retention
Literature Review
Customer retention has been one of the most important aspects that the business organizations are trying to achieve. Because of the benefits that lie within the customer retention, the business leaders are attempting to stretch their programs that can highlight the value given to their customers. The rival organizations that are operating under the same industry are also competing to gain advantage over the other through acquiring their customers and retaining them. The continuous transactions between the customers and the enterprise are a great opportunity on the part of the business to boost their competencies and satisfy their goals. However, the aim of the business towards achieving the customer retention is critically assessed to start satisfying the customers.
Overview on Customer Retention
Customer satisfaction can be also equaled with the customer retention. Logically speaking, when the customers are satisfied with the products or services by the organization, there will be customer loyalty and maintain the relationship they had. The retention of the customers means everything for the organization and it is also important as part of the promotional strategies. Thus, strengthening the customer relationship can bring the enterprise far. However, not all the customers can deliver the good fortune for the organization. First, there should be an effort placed for the customers to achieve their loyalty and creating the relationships. And then, maintaining the relationship to increase the profit gain and advantages of the organization (Jacada Fusion, 2008). The customer satisfaction with a company’s products or services is often seen as the key to a company’s success and long-term competitiveness. In the context of relationship marketing, customer satisfaction is often viewed as a central determinant of customer retention. However, the few empirical investigations in this area indicate that a direct relationship between these constructs is weak or even nonexistent. This evidence attracted most of the researchers which gives to the opportunity in examining the relationship of marketing and customer satisfaction which will result in customer retention.
Essence of Direct Marketing
Unlike the traditional use of commercials and huge billboards, the direct marketing can be more conventional and simple because through the use of the brochures, promotions, flyers, electronic mails and other forms of simple advertisement, the merchandisers or sellers can directly affect the customer’s perceptions on their product or service.
With the power of communication, a comprehensive plan is formed that are efficient and can be appropriate on the target market or audience. The marketing tactics includes the idea of low-budget, yet powerful representations of the messages. With the well developed plan can be seen in the value and how comprehensive it states the organization’s proposition. With the mixture of the planning and execution is the basis used to determine the success in delivering the integrated marketing through communication (Neumann and Sumser, 2002).
The Strengths and Weaknesses of Direct Marketing
There are identified strengths in terms of direct marketing. Through the use of direct marketing, the organization is capable in targeting the market specifically which gives them the opportunity to enhance the features of their services and products. The production costs can be controlled to a certain degree; can cover every household the organization is targeting: can measure the response rate; and if using the electronic mailing, can help the marketer to personalize the campaign.
On the other hand, the weaknesses are identified such as having the inaccurate lists of respondents because of unmanageable mailer which is also prone in interactive risks. In addition, the mailing costs may continue to rise and the printing and production costs continue to rise. There is also a difficulty in coordinating the delivery with sales dates. There is also a low response rate and inflexible, requires maximum preparation and lead time.
In order to gain the impact of the direct marketing in achieving the customer retention, it is better to examine one particular industry and that is the hospitality industry or the on-line travel agencies.
On-Line Travel Agencies
There are many traditional travel agencies that are operating on-line, but only few are known by the passengers. The transaction between the travel agents and airlines is through the commission basis. However, because of the direct booking of other passengers the commission basis is slow diminishing and they have to charge the customers for the service fee. The usual offers they give depend on their strategy and advertisement and not part of the airlines (Kearney & Robinson, 2004).
References:
Hennig-Thurau, T., & Klee, A., (1997)The Impact of Customer Satisfaction and Relationship Quality on Customer Retention: A Critical Reassessment and Model Development, Psychology & Marketing, 14(8) John Wiley & Sons, Inc [Online] Available at: http://www.uni-weimar.de/medien/marketing/mitarbeiter/tht_pdfs/%5BI1%5D_Hennig-Thurau_Klee_P&M_1997.pdf [Accessed 23 October 2010].
Jacada Fusion (2008) Communications Industry Report: Customer Retention Strategies in Action [Online] Available at: http://www.jacada.com/whitepapers/pdfs/45.100.0206-Customer-Retention-Strategies.pdf [Accessed 23 October 2010].
Kearney, T.J., & Robinson, R., (2004) Direct Marketing in the Travel Industry: A Revolution in Channel Structure [Online] Available at: http://www.the-dma.org/dmef/proceedings/kearney.pdf [Accessed 23 October 2010].
Neumann, E., & Sumser, R., (2002) Marketing Communications: A Vital Element of Achieving Change, The Journal of Public Manager, 31(4).
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