1
Research Study on customer retention
Submitted To: Mr. Arif Vaseer
Prepared By: Usman Maqsood
(MB073057)
Ayaz Mahmood
(MB073112)
Sadia Akber
(MB073060)
2
Table of Content Abstract…………………………………………………………………… 03 Purpose…………………………………………………………………... 03 Procedure………………………………………………………………… 03 Result…………………………………………………………………….. 03 Key word …………………………………………………………………03 Introduction ………………………………………………………………. 04 Importance………………………………………………………………...04 Objective…………………………………………………………………..04 Research Question………………………………………………………...05 Research design details……………………………………………………05 Literature Review ………………………………………………………… 06 Research problem…………………………………………………………. 06 Theoretical framework……………………………………………………. 08 Hypotheses………………………………………………………………... 09 Procedure………………………………………………………………….. 10 Questioner ………………………………………………………………... 11 Population and sample……………………………………………………. 12 Data collection methods………………………………………………….. 12 Data treatment……………………………………………………………. .13 Data collection……………………………………………………………..13 Result and interpretation………………………………………………….14 Hypothesis testing detail …………………………………………………..15 Discussion…………………………………………………………………...16 Limitations………………………………………………………………….17 Conclusion…………………………………………………………………..17 Recommendations ………………………………………………………….17
3
Abstract Purpose- customer retention has been a significant topic since the mid-1990 but little research has been conducted into customer retention process the purpose of this research is to look at dissimilar customer satisfaction, loyalty and services metrics and analysis their relationship to customer retention. Procedure this is carried out using a quantitative survey .The data for this study come from the customer of the well repute bank from its three branches. Regression analyses were used to test the hypotheses. Finding indicates that services, satisfaction, loyalty, indeed contribute the long term relationships and customer retention. Key words Customer retention, customer loyalty, customer satisfaction, Services Paper Type Research Paper
4
Introduction Importance - The maintenance of the patronage of people who have purchased a company's goods or services once and the gaining of repeat purchases. Customer retention occurs when a customer is loyal to a company, brand, or to a specific product or service, expressing long-term commitment and refusing to purchase from competitors. The benefits of retaining customers to the organization are higher margins and faster growth, derived from the notion that the longer a customer stays with an organization, generally the higher the profit. Customer services are the service provides to the customer for the satisfaction during and after the purchase client services is important port of the any service organization. Customer service or the client service is the service provided to the customer for fulfill his needs during and after the purchase. It is necessary to every business organization to understand the customer needs for value added service. the adherents of the customer retention argue that retaining customer improves profitability, mainly by reducing the cost incurred in acquiring new customer ( Reinchheld and Kenny,1990;) Without customer satisfaction it is impossible for any business to retain itself and achieve his desired goal. Satisfied customer who satisfied with your products and services and another is dissatisfied customer who purchase some things and they are not satisfied with your services or products and another is loyal customer who buy some things from you one time and they are satisfied and buy again and again and they are loyal committed and satisfied with your services and products and they are called retained and satisfied customer those companies they have large numbers of loyal customer his profitability ratio and company growth is more then compare to others companies.
Objective - Our study focuses on contribution of customer satisfaction, customer loyalty, and services quality to customer retention and long term relation. We extend the existing knowledge by taking a relationship perspective to study the effect of services, satisfaction and loyalty on customer retention. Generally, using intentions of independent variable implies a transaction on customer retention.
5
Research Question What is the role or contribution of customer satisfaction, customer loyalty, and quality services in customer retention process?
Research design As a research setting we chose the services sector. It is a business service market where long-term relationships exist; we used triangulation to study the concept and their interrelation. A two step approach was followed for empirical research First, we conducted a qualitative exploratory study consisting of literature review and key inform interview. And depicting bank service-client relationship to understand the dynamics of services-client relationship and the factor that play role in their development and maintenance. The relevance and sufficiency of the proposed independent variable were assessed and indication was sought for their measurement. Both the literature review and the understanding the bank services client relationship confirmed the existence of affective commitment and support our hypotheses. The hypothesis that deal with the antecedent of commitment was also confirmed and also no new variable were added. In second step empirical step we conducted a large-scale field to test the modal. The questioner was solved from client of the bank. Our questions are focuses on the check the relationship with the customer retention of independent variables.
6
Literature review Customer retention has been found to be a key of profitability (Desai and Mahjan 2004”) and an important determinant of market share among service firms (Appiah-adv 1999).customer retention is vital to any organization. Companies with high retention also grow up faster in the organization structure. Customer can also be retained if they are loyal and motivated and satisfied. The (Ahmad and butlle) research shows that the benefits retention to the organization is higher profit and faster growth derived from the notion that a longer a customer stays with an organization. .(Ahmad and Butlle 2002;).Customer retention marketing is based on cover first buyer into loyal, persistent and also create long term customer relationship. long term relationship developed with the help of customer satisfaction. satisfied customers who buy some product one time and they are satisfied then they purchase again and again. Customer retention marketing is also run on the based on services and customer satisfaction loyalty these all activities goes behind, customer retention marketing. We can easily scrutinize the consumer behavior by his buying behaviors .who rationale that satisfaction is based on a customer estimated experience of the extend to which provides services that accomplish his or her experience. (Geospatial 2001) Without customer satisfaction it is impossible for any business to retain itself and achieve his desired goal. Satisfied customer who satisfied with your products and services and another is dissatisfied customer who purchase some things and they are not satisfied with your services or products and another is loyal customer who buy some things from you one time and they are satisfied and buy again and again and they are loyal committed and satisfied with your services and products and they are called retained and satisfied customer those companies they have large numbers of loyal customer his profitability ratio and company growth is more then compare to others companies. As customer is the most important person in any business customer is actually not dependents upon us we are dependent upon him. Customer is life blood for business, hence it’s necessary to understand the customer behaviors and make sure satisfaction for developing customer retention. (bernd stauss and Klaus chojnacki2001) research shows that the customer club satisfaction has a remarkable impact on the customer relationship satisfaction and customer retention (recichheled and kemmey 1990,recihheld 2001) the
7 prime objective of the customer retention is to achieve “zero defection” of the profitability customer( reichheld,1996). The activity a business perform to identification, acquire, develop and create loyalty In to profitable customer by delivering the right product or services to right customer through right channel. Relationship marketing today is most powerful business marketing techniques where you satisfied each customer need and wants .You can make more money save time and deliver outstanding customer services which you can gain a large share of each customer behavior.
Research Problem New Market condition sharpens completion. The number of competitor rises while at the same time the services and products available on the market differ less and less at their core. The resulted in decreasing of customer retention and increasing cost to do business. ‘If the planning of customer retention is effectively and effectively boots customer satisfaction and retention rates. Organizations have discovered and research studies have shown that retaining current customers is much less expensive then attempting to attract new once. Companies have come to realize that in order to develop successful long-tem relationship with the customer they should focus on the economically valuable once. Proper customer retention practices can potentially impact customer satisfaction rating can potentially lead increase customer retention. This theoretical framework also shows that if organizations increase the satisfaction and services they create the loyalty and then companies increase the customer retention rate. Therefore, the research problem is study of impact of customer satisfaction, loyalty, and Services on customer retention process.
8
Theoretical frame work
Dependant variable –
Services Quality Customer Satisfaction Customer Loyalty
Independent variable Customer Retention in theoretical diagram its showers that that in this research the services quality, customer satisfaction and customer loyalty are the independent variable and customer retention is dependant variable
9
Hypotheses H1.The higher the awareness of service quality, the superior the level of repurchases intention. H2. The higher the level of customer satisfaction, the greater the level of retain customer. H3. The degree of the customer loyalty increase, the grater the level of repurchases intention.
10
Mohammad University Islamabad Islamabad.
Ali
Jinnah Campus,
This survey form is purely made for the purpose of providing help in the research conducted by the students of Muhammad Ali Jinnah University in the course of Marketing Research. All the persons filling this form must know that their information will be kept confidential.
Personal Information: Name: ___________________
Gender: Male/Female
Age: 20-25
26-30
31-35
36-40
41-45 46-50 51 Above
Instructions: 1 Strongly Disagree
2 Disagree
3
4
Neutral Agree
Up to what extent you agree with the statement.
5 Strongly Agree
11
Services: Q: 1.The overall services of this bank are beneficial to me. Q: 2.I will not regret my friends if they want to have services of this bank. Q: 3.This bank has better services than its competitors.
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
Q: 4.The services of this bank are high quality.
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
Customer Retention: Q: 5.This bank fulfilling my needs. Q: 6.It is pleasurable to communicate with the staff of this bank. Q: 7.in future, I would like to maintain the relationship with this bank.
Loyalty: Q: 8. I believe bank deserve my loyalty. Q: 9. I am happy to retain my account in this bank. Q: 10. My loyalty to this bank has growth stronger.
Satisfaction: Q: 11. The operations of this bank are smooth. Q: 12. This bank provides all information required by me. Q: 13. This bank has personal meaning to me. Q: 14. The staff of this bank assists and guides properly. .
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1 1
2
3
4
5
2
3
4
5
1
2
3
4
5
12
Population Sampling The population is the customer of well known bank of the Islamabad Pakistan for this purpose we select randomly three branches of the bank its located in different areas of the city. For this research we used the demographic concept some female client of the bank and of male clients. Sample size s 150 in which we eliminate those sample which are not solved completely or not fulfill the requirement of our research. The total size of the sample is 100 people from 7 different age groups We categories the consumer in 7 groups •
20-25
•
26-30
•
31-35
•
36-40
•
41-45
•
46-50
•
51 above
Data collection methods
13 Since all companies in all services sectors have been found to implement rational aspects of marketing (Coviello et al., 2002) our population of interest was the full range of primary data collect from the library books journals and previous research papers. For secondary data tertiary (service) sector of the industry was selected. The service sector we select is banking sector a well known bank select for this search. And 3 different branches of the bank was selected which have different demographically environment. A questionnaire was developed. The instrument was paper questioner to the sample. For the encourage respondents we leave the space for his name. Respondents were simple randomly selected to part in survey. Total 150 surveys were completed the response rate was 80.66 percent.
Data treatment (measuring instrument & statistical instrument) Data was analyzed using procedures with in Microsoft Excel version 2003.
The
questionnaire contained 14 likert scale questions. In which first independent variable services contain 4 questions. Second variable is loyalty contain 3 questions and third independent variable is satisfaction contain 4 questions. Dependant variable is customer retention its contain 3 questions. In the questionnaire the variable and independent variable was operationalzed thus; this bank fulfill your needs? This variable was measured on a five-point lekert scale anchored at five points. The first point 1 anchor read “ strongly disagree” and second point anchor “disagree” and 3 point anchor “Neutral” and 4 point anchor “Agree” and 5 point anchor “Strongly disagree” And regression formula was used to check the relation between these all. 1 Strongly Disagree
Data collection
2 Disagree
3 Neutral Agree
4
5 Strongly Agree
14 A total of 100 response were obtained, representing a 80.66 percent response rate in which 40 questioner collect from main branch and 30 questioner was collect from second bank branch and 30 questioner was collect from another branch
Results and interpretation section The sampled company is generally not very advanced in customer retention process. That’s why the response rate is not strangely positive. The result is normal positive in all independent variables and dependant variable. And another variable services is the result coefficients is 0.392515196 it’s a not strongly positive it is positive result. Another independent variable is customer loyalty is 0.451035852 it’s reflect the result is batter then services variable. And its positive result. Third variable is customer satisfaction it’s a most important independent variable its result is positive but week 0.130834016
Regression Statistics Multiple R 0.773224293 R Square 0.597875808 Adjusted R Square 0.585309427 Standard Error 0.487260129
15 Observations
Intercept SERVICES LOYALTY SATISFACTION
100
Coefficients 0.255092061 0.392515196 0.451035852 0.130834016
Hypothesis testing details We now turn to our analysis of the hypothesized relationship. Which of the tested processes are associated with excellent customer retention? Bi-variate regression We are used to measure the hypothesized relationship where a significant regression was identified, Mean tests were also performed. H1.The higher the awareness of service quality, the superior the level of repurchases intention. There is a statistically significant regression between having quality services and exceeding customer retention expectation (r=0.597875808; p >0.392515196) H1 is therefore it’s positive and accepted. H2. The higher the level of customer satisfaction, the greater the level of retain customer.
16 There is a positive and statistically significant between having customer satisfaction and exceeding customer retention expectation (r=0.597875808; p>0.130834016) H2 is therefore is positive but not strongly positive and accepted. H3. The degree of the customer loyalty increase, the grater the level of repurchases intention. There is a positive and statistically significant between having customer satisfaction and exceeding customer retention expectation (r=0.597875808; p>0.451035852) H3 is therefore is positive.
Discussion Of the three hypotheses tested, and all were accepted and we find the statistically significant relationship between all the independent variable with dependant variable our first find is The higher the awareness of service quality, the superior the level of repurchases intention. and its indicate the positive result. We have established a clear link between customer retention process with services quality other academic research (karian A.Venetis virje universities Amsterdam, and pervaz N.Ghauri ,2004) has identified a strong association between the customer retention and services qualities its finding indicates that services quality indeed contributes to the long term relationships and customer retention another research also indicate that (Jillian Dawes Farquhar 2003) these finical services retailers are aiming to retain customer through building relationship but that system , strategies and structures may reflect transactional exchange. Our another result indicate the if the degree of the customer loyalty increase, the grater the level of repurchases intention. our result is positive and its indicate the
17 positive link between the loyalty and customer retention so another research ( bernd stauss 2001 ) they indicate that customer club satisfaction and loyalty has a remarkable impact on the customer relationship and customer loyalty . Our third independent variable is customer satisfaction it is H3 the higher the level of customer satisfaction, the greater the level of retain customer. we find that the higher the level of customer satisfaction its reflect that the high the level of customer satisfaction. Another academic research show or indicate that is ( Oue C.Hansemark and Marie Albinsson 2000) all except the first two of the these categories of experience were found to enhance retention and similar. The strongest connection between retention and satisfaction strategies turned out to be in term of relationship and confidence. And another research indicate the strong relationship between customer satisfaction and customer retention is (Rust and Subramanian, 1992). Services quality and services features and customer-complaint handing determine customer satisfaction in banks and services offerings, In order to improve any services business they have to implement customer loyalty program. Customer loyalty program are different to normal customer satisfaction surveys because the later use outcomes as an indicator of past success. The real goal is to understand and improve the areas of the services business that are drive customer loyalty.
Conclusion Finally this research indicates that services, satisfaction, loyalty, indeed contribute the long term relationships and customer retention. If services companies provides batter services and understand the need and wants of the customer they can develop the long term relationship with his customer and its helpful to retain the customers.
Limitations There are two notable limitations to this study first it was conducted in a single geographic region, and the result therefore may not transfer in to a different geographic and second is this research in applicable for Pakistani services companies not for other type of the companies like manufacture and etc
18
Recommendation The problem in this filed of research is the geographic and demographic environment effect that’s why the implementation has been changed This research can implement only for the services sector and they willing to provide the best services to his customer the variable which is used in our research is affected on the customer retention process. Our research is show the relation with the one another researcher ( karian A. venetis2004) Its finding indicate that services quality indeed contribution to the long term relationship and customer retention And earlier research (Cronin 2000) positive services quality as an a antecedent off customer satisfaction.
References Karin a.venetis,. (2004), “Services quality and customer retention: building long-term relationships”, European Journal of Marketing, Vol.No38. 11/12, pp.1577-1598
Trevor Richards,. (1996), “using the conversion modal to optimize customer retention”, MCB university Press, Vol. No6. 11/12, pp.45-58
Chatura Ranaweera,. (2003), “some moderating effects on the service quality-customer retention link”, international journal of operations &production management, Vol. No23., pp.230-248
Jillian dawes farquhar,. (2004), “customer retention in retail financial services: an employee prospective”, international journal of operations &production management, Vol. No22., pp.86-99
Bernd stauss,. (2001), “retention effect of a customer club”, international journal of operations &production management, Vol. No12., pp.7-19
Lawrance ang and francis Buttle,. (2006), “customer retention management process”, European journal of marketing, Vol. No40., pp.83-99
19 Stephanic coyles,. (2006), “customer retention is not enough”, Emerail Group Publishing limited, Vol. No.22/2, pp.101-105
