Customer Retention and its implications in service businesses marketing
... Along with the growth in this industry there has been a shift in marketing perspectives and concepts in order to exploit the potential profits and boost the global economy. Researchers, academics and marketing practitioners are continuously revising and developing marketing concepts and theories for the benefit of services businesses. There are vast differences between a service business and one who produces goods. Marketing concepts have appropriated themselves to each industry with some benefiting services, other assisting goods and many working over both fields. Customer retention is the primary focus of this paper and the idea is one that has become critical for service businesses in particular. ‘Customer retention can be seen as the mirror image of customer defection’. ... By utilising strategies that have been developed, retention figures can be improved and defection reduced. This concept has numerous benefits for a service firm, mainly as a tool for maximising profits, but moreover, should be used as a basis for establishing life-long relationships with customers. ... Transition to current marketing perspective Customer retention stems from the focus that has been placed on customer satisfaction over the past two decades and also with the development of relationship marketing. During the 1980’s, marketing research centred on the correlation between an organisations’ profits and the satisfaction levels of its’ customers. This customer satisfaction focus led to a more valuable and richer understanding of service quality and customer expectations, so organisations began to adopt strategies to increase levels of customer satisfaction with the ultimate goal of achieving higher profits (Curasi & Kennedy, 2002). i Transactional focus Throughout the 1990s, researchers attempted to further qualify the link between customer satisfaction levels and business profitability and the impact it has on a customers’ intention to repurchase. This gave birth to the concept of relationship marketing. Previously, marketing efforts have taken a transactional focus, which concentrates on single sales, product features, discontinuous customer contact and limited commitment (McDonald, et al. ... Under this manner of thinking, customer retention could be seen as the ‘end’ rather than the means to delivering long-term profitability to firms (Ahmad & Buttle, 2001). ii Relationship focus The relationship focus, on the other hand, embraces customer retention as a deliberate strategy through continuous customer contact, delivering benefits, a long-term outlook and higher commitment and an expectation that all staff will deliver service and quality (McDonald, et al. ... One of the first definitions of relationship marketing came from Grönroos in 1990 who states: 3 Relationship Marketing ‘Marketing is to establish, maintain and enhance relationships with customers and other parties at a profit so that the objectives of the parties involved are met. ... Another definition of relationship marketing is; ‘marketing based on interaction within networks of relationships’ (Gummesson, 2002). Evert Gummesson takes the concept to further heights by stating the rationale behind relationship marketing is at the core of human behaviour. Just as human evolution requires relationships to develop and advance, so to do businesses.