Our CEO is a big believer in advisory councils and uses these both for market research and customer retention. The company excels at execution yet relies on anecdotal and a very imprecise methodology for actually quantifying the impact of customer retention strategies. There is also a strong bias to see only the bright side of retention strategies and ignore the reasons why customers leave. Sales reverts to claiming price as being the only reason customers are lost to competitors, yet there is no formal win/loss analysis because Sales sees it as a threat. Customer Service relies on the most positive of figures to show performance gains in customer satisfaction and retention, yet only interviews the most loyal of customers that come to all events. Clearly there is self-selection going on in these methodologies, and with everyone on a different set of assumptions and data sets, it's clear that much needs to be done to get a single version of the truth when...

It is the intent of this analysis to evaluate the advantages and liabilities of the customer retention strategy the company I work for relies on.
Background

The company I work for manufactures high technology products including parts for computer equipment used in personal computers and network routing equipment used for creating local area networks. Customer retention is critical for the continued profitability of the business, as our product lifecycles change rapidly, and customers need to make the transition from one product to the next rapidly if new revenue is going to be earned. Customer retention programs overall have been effective in keeping our largest Original Equipment Manufacturer (OEM) accounts purchasing subsequent generation products from our company, yet the mid-tier and smaller companies are much more transitory between product generations. The result is that it is often very