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Research Study on
customer retention

Submitted To:

Mr. Arif Vaseer

Prepared By:

Usman Maqsood (MB073057)

Ayaz Mahmood (MB073112)
Sadia Akber (MB073060)
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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Mohammad Ali Jinnah University

Islamabad Campus, Islamabad.
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 2 3 4 5
Strongly Strongly Agree
Disagree NeutralAgree
Disagree

Up to what extent you agree with the statement.

Services:
Q: 1.The overall services of this bank are beneficial to me. 1 2 3 4 5
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Q: 2.I will not regret my friends if they want to have services of 1 2 3 4 5

this bank.
Q: 3.This bank has better services than its competitors.
1 2 3 4 5
Q: 4.The services of this bank are high quality. 1 2 3 4 5

Customer Retention:
Q: 5.This bank fulfilling my needs. 1 2 3 4 5
Q: 6.It is pleasurable to communicate with the staff of this bank. 1 2 3 4 5
Q: 7.in future, I would like to maintain the relationship with this
1 2 3 4 5
bank.

Loyalty:
Q: 8. I believe bank deserve my loyalty. 1 2 3 4 5
Q: 9. I am happy to retain my account in this bank. 1 2 3 4 5
Q: 10. My loyalty to this bank has growth stronger.
1 2 3 4 5

Satisfaction:
Q: 11. The operations of this bank are smooth. 1 2 3 4 5
Q: 12. This bank provides all information required by me. 1 2 3 4 5
Q: 13. This bank has personal meaning to me. 1 2 3 4 5
Q: 14. The staff of this bank assists and guides properly.
1 2 3 4 5
.
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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

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
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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 2 3 4 5
Strongly Strongly Agree
Disagree NeutralAgree
Disagree

Data collection
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
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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
Observations 100

  Coefficients
Intercept 0.255092061
SERVICES 0.392515196
LOYALTY 0.451035852
SATISFACTION 0.130834016
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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.
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.
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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
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
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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

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
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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

Stephanic coyles,. (2006), “customer retention is not enough”, Emerail Group Publishing limited, Vol. No.22/2,
pp.101-105