Research Study Exploring Factors That Affect Customer Retention

3301 words - 13 pages

1. Abstract

Purpose: This research paper gives an insight on the factors affecting customer retention, customer retention is now known to be a key factor which can alter customer’s decision on repurchase of a particular product/ service. This research paper discusses relationship marketing, customer loyalty and customer satisfaction as basic factors affecting customer retention.

Design/ Methodology/ Approach: The data for this study was gathered through a questionnaire distributed to population in Islamabad and Rawalpindi. The results were obtained by testing the hypothesis with regression.


Research Limitations: The limitation for this paper is that data was gathered only for telecom industry. This research can further be done on apparel and FMCG sector.

Keywords: Customer retention, Customer loyalty, customer satisfaction and relationship marketing.


Customer retention is a very old phenomenon companies know that in order to generate greater revenues they need to retain the old customers, the great thing about retaining old customers was that they were loyal to the company (product, service) and would not think to switch to some other product very easily, but however with the passage of time, entry of competitors and removal of barriers for global business need was felt to gain knowledge about retaining the customers. It was well explained by the Pareto model that 80% of the business revenue was generated due to 20% retained customers and due to their re-purchase, hence proving that it is far more difficult to attain a new customer than to retain an old one.

The purpose of this paper is to examine the different factors effecting customer retention. Customer retention is the most important issue to be sorted out in product as well as service sector. Need was felt for research on this area which highlighted that the above mentioned factors can help in customer retention.

It was important to know what organizations should do in order to retain customers, and also to know whether they were heading in the right direction. There are many companies which spend a lot on retaining their customers but do not know which measures they should adopt, also they do not even know which strategies should be continued and which ones should be discarded in order to generate more profit.
Reichheld (1990) studied that a 5 percent increase in customer retention increased the customer’s net present value between 25- 95 % across a wide range of business environments.

2.1 Significance of the study:

In this research paper we have studied the factors affecting in retention of customers, there are many ways in which management can focus on customer retention, this area had not been completely studied over period of time and specially in Pakistan no attention is given to customer retention, it is this gap that would be discussed and concluded in this research paper.

Despite of the fact many...

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