What does customer retention refer to?

Customer retention refers to the ability to keep existing customers over time. This concept is critical for businesses because retaining customers is often more cost-effective than acquiring new ones. When a company successfully retains customers, it builds loyalty and trust, leading to repeat business and a potentially higher lifetime value for each customer. Retention strategies typically involve providing high-quality products or services, excellent customer service, and effective communication to ensure customers feel valued and satisfied.

Acquiring new customers, as mentioned in the first choice, is distinct from retention and focuses more on growth rather than maintaining existing relationships. Evaluating customer service satisfaction relates to understanding how customers feel about their experiences but does not directly address the concept of retention itself. Measuring overall market share is a broader business metric that involves assessing a company's performance relative to competitors and is not specifically tied to customer retention practices. The focus on keeping existing customers over time is what makes the distinction clear.