Customer retention management: a reflection of theory and practice

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.