What direct effect does higher customer retention have on a company?

Higher customer retention leads to greater stability in revenue streams because when customers remain loyal and continue to purchase a company's products or services over time, it contributes to a more predictable and consistent income for the business. Loyal customers are likely to make repeat purchases, thus enhancing the overall financial health of the company.

This stability allows businesses to allocate resources more effectively, plan for the future, and invest in growth opportunities. Moreover, retaining customers often costs less than acquiring new ones, which can further reinforce the company's financial stability.

The other options do not directly relate to the primary effect of higher customer retention. For instance, increased marketing expenses typically arise from efforts to acquire new customers rather than from retaining existing ones. Similarly, lower product availability and reduced employee engagement are not outcomes tied to customer retention; instead, they may stem from operational or management issues within the company.