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Which of the following strategies is used by successful companies to improve the value of their customer base?
1. Treating each customer equally
2. Reducing the rate of customer defection
3. Treating each customer in a special way
4. Giving gifts and goodies to each and every customer

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Correct Answer - Option 2 : Reducing the rate of customer defection

Reducing the rate of customer defection is one of the strategies is used by successful companies to improve the value of their customer base.

Different strategies are often adopted by firms to create a valuable customer base. Treating each customer in a special way is not really possible for any company, hence a mass process of retaining customers is adopted.

  • Each firm has its own set of targeted customers and among its targeted customers, there are customers who are extremely loyal to it. They do not switch from one firm to firm, hence the firm also treats them accordingly. Thus, it is never possible for firms to treat all the customers equally.
  • It is an accepted fact that firms often offer discounts and prizes to attract new customers. However, these prizes and discounts are only for a limited period of time and given to a selected number of people. It is not feasible for companies to give away gifts to each and every customer. There are cost constraints that firms have to consider while making these decisions.
  • One of the most important factors for a purchase decision is to make products of good quality. Reducing the defects in the products will automatically lead to more customers becoming loyal to the firms. This is one of the key elements recognized in creating a strong customer base.

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