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Keywords
Relationship marketing, Customer satisfaction, Retention
Abstract
Customer retention is increasingly being seen as an important managerial issue, especially in the context of saturated market or lower growth of the number of new customers. It has also been acknowledged as a key objective of relationship marketing, primarily because of its potential in delivering superior relationship economics, i.e. it costs less to retain than to acquire new customers. This paper reports an investigation, through case studies, that is concerned with testing whether or not a theoretical position relating to strategies for retaining customers reflects practices in four firms. The assumption is that generalised theories, which imply universal applicability, tend to overlook the distinctive impact of contextualised business conditions on effective customer retention strategies. The paper recommends that both theoreticians and managers should consider "business context" in developing and implementing customer retention strategies.
Introduction
The advent of 4Ps marketing theory in the early 1960s, on the back of large-scale industrial development and mass production, influenced the way marketers saw their customers. Customers, under this traditional or classical approach, are seen as groups of homogeneous potential buyers with the same needs. Marketers then predicted what customers needed, produced the products and pushed them to their customers through their distributors or drew the customers towards the points of sale by manipulating the 4Ps marketing mix: price, place, promotion and product. Traditional marketing approach still dominated the thinking of both teachers and practitioners of marketing. Researchers, however, began to realise the inadequacy of this classical approach in explaining emerging marketing management phenomena specifically from the industrial marketing perspective (HAkansson, 1982; Ford, 1997); and service marketing perspective (Berry, 1983; Gronroos, 1990) - a perspective that was recognised even earlier by managers, in practice (Shostack, 1977). Maintaining long-term relationships re-emerged as an important mission for businesses. Multinational companies and leading advocates of mass marketing approaches, for example, Lever Brothers and Elida Gibbs, also began to restructure their marketing departments and appoint managers to give attention to their existing customers. They did away with brand managers, and set up development teams responsible for maintaining relations with retailers across companies' brands (The Economist, 1994, pp. 79-80).
The tangible effects of companies' commitment to retaining customers were first published by Dawkins...