Effects of Relationship Marketing on Customer Retention for Competitive Advantage

Abstract: 

Marketing science has long been concerned with the question of the extent to which customer satisfaction leads to customer retention and subsequently to a positive effect on firm’s profit. Most of the behavior-driven explanations posit a generally positive relationship between the two. In this paper, the relationship between customer retention and competitive advantage has been analyzed from marketing viewpoint. There are many different relationship marketing tactics implemented for retaining customer. However, some of those tactics did not affect customer loyalty effectively, and switching behaviors frequently occur among most of targeted customer. Therefore, this study is aimed to investigate the impact of relationship marketing tactics on customer loyalty and trust, which increase customer retention and competitive advantage. An analytical model is developed as a guideline to test the relationships among communication, trust, commitment, loyalty, service performance and customer retention and competitive advantage. In order to collect primary data, a selfcompleted questionnaire is designed and is randomly given to the respondents. The SPSS software was used to process the primary data. The study of desertion provides insight into how to improve products and services offered to the targeted market by developing effective retention programs and consequently creating long-term relationships. It is not only because retaining a customer is cheaper than acquiring a new one or because of the necessity of retaining customers until they are profitable. Rather, client retention is important because it is a value generation strategy for the relationship marketing; that is the relationship marketing value is not only related to the bottom line of financial statement but also to the present value of its future revenues. Guaranteeing the relationship marketing future revenues greatly depends on strengthening its customer’s loyalty. For this reason, two relationships marketing with the same number of customers, the same costs, profitability, and debts condition may have different values if one of them has more loyal customers than the other. As such, customer retention is not only necessary for relationship marketing sustainability but it is also a value generation strategy for the shareholders. The study provides new insights into the theory and practices of relationship marketing.

Subject and Keywords: 
Year: 
Volume: 
XXXVI
Issue: 
2
Page: 
199-217
Article Identifier: 
1435