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Customer Engagement and Behavioral Considerations
Tony Carter*
College of Business, University of New Haven, West Haven, CT, USA
(Received May 2005; final version received December 2005)
Customer Retention is more complex than ever before and there has been adramatic change in how selling takes place (Jacob, 1994). There is even strongevidence that reveals US corporations lose half their customers in five years(Ganesh, Arnold, & Reynolds, 2000). Changes such as technological advances, amore frantic competitive climate, globalization, more demanding, sophisticatedcustomers and even catastrophic crisis are some of the shifts in the businessenvironment causing this (Stiglitz, 2003). The faster the economy changes, withnew innovations and opportunities, creating more choices and options forcustomers, the harder it is to retain better informed and astute customers that canswitch allegiance quickly, providing themselves with greater value and choice(Stiglitz, 2003).
Keywords: retention; customers; satisfaction; loyalty; relationship building;competition
Customer Retention Survey considerations
A survey regarding customer retention was used and sent to 205 companies with 92
responses. The survey consisted of 11 questions that were designed to inquire about
customer retention, customer loyalty, customer intimacy and satisfaction programs.
The questions, while designed qualitatively to examine relationships not easily
explained quantitatively, had the responses assigned a code so that the answers could
be used quantitatively to avoid being overwhelmed in data from qualitative
responses. For Question 1, How does your firm measure customer retention? was
assigned a code of 0 for none, 1 for technology and 2 for other. The response
here was 44% using technology and 56% using other than technology. For example,
many firms are using Sales Logic a Customer Relationship Management software
package that tracks sales calls and sales activity. Other responses ranged from
surveys, monitoring sales activity and renewed orders.
Question 2, Do you have special programs to develop customer satisfaction?
used a code of 0 for no and 1 for yes. Here, 44.6% said no and 55.4% said yes and
the responses included incentives offered to key customers to increase retention,
formal programs and efforts to notify customers of new products, services or
specials first and provided with discounts and priority service. In Question 3, What
percentage of your annual sales is from existing customers? was a continuous
measurement where the mean was 73%. For Question 4 What is the average number
of years your company retains customers? more than 50% keep their customers for
six years or more. For Question 5 How important is customer loyalty to your
*Email: tcarter@newhaven.edu
Journal of Strategic Marketing
Vol. 16, No. 1, February 2008, 2126
ISSN 0965-254X print/ISSN 1466-4488 online
2008 Taylor & FrancisDOI: 10.1080/09652540701794387
http://www.informaworld.com
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company? the code used was 0 for not important and 1 for very important, which
was the response of 98%.
In Question 6, Does your firm measure customer loyalty? 0 and 1 for yes
codes were used and 73% said they do not measure customer loyalty and 27% said
yes and many responses reflected a sentiment that loyalty is difficult to quantify. On
Question 7a What do you mean by extremely loyal? a code of 0 meant not defined
and 1 that customers perceive value. Here, 95% of respondents said that there was
perceived value in extreme loyalty and 5% did not answer, suggesting ambiguity in
this question. With Question 7b Do you consider extremely loyal the same as
customer intimacy? a 0 code was used for no and 1 for yes and 62% said yes with
38% not answering, again suggesting ambiguity in the question.
Question 8 asked Have any of your top five customers purchased from your
competition during the last three years when you expected to receive the order?
Using a 0 code for no and 1 for yes 96% of respondents said yes and 4% said no. In
Question 9 asking How does your firm define customer retention? all firms had
some characterization ranging, which typically was maintaining business and sales
from customers, continued sales activity and keeping customers. For Question 10
How many people are employed in your sales organization? over 64% have sales
organizations with over 50 people and with Question 11 What is your position?
88% were sales managers and 11% company presidents.
Customer Retention Survey
Customer Retention Survey findings
More than 50% of the respondents reported that the percentage of sales from
existing customers was 75% or greater. Therefore, customer loyalty and retention are
extremely important to the majority of respondents to this survey. Despite the
importance of customer loyalty and retention to respondents in this survey, only 55%
reported having special programs in place to develop customer satisfaction.
Table 1. Question 1: How does your firm measure customer retention?
Frequency Percent Valid Percent Cumulative Percent
Valid Technology 40 43.5 43.5 43.5
Other 52 56.5 56.5 100.0
Total 92 100.0 100.0
Table 2. Question 2: Do you have special programs to develop customer satisfaction?
Frequency Percent Valid Percent Cumulative Percent
Valid No 41 44.6 44.6 44.6
Yes 51 55.4 55.4 100.0
Total 92 100.0 100.0
22 T. Carter
Table 3. Question 3: What percentage of your annual sales is from existing customers?
Frequency Percent Valid Percent Cumulative Percent
Valid 30 2 2.2 2.2 2.2
40 9 9.8 9.8 12.0
50 7 7.6 7.6 19.6
55 1 1.1 1.1 20.7
60 10 10.9 10.9 31.5
65 2 2.2 2.2 33.7
70 10 10.9 10.9 44.6
75 6 6.5 6.5 51.1
80 14 15.2 15.2 66.3
82 1 1.1 1.1 67.4
85 4 4.3 4.3 71.7
88 2 2.2 2.2 73.9
89 2 2.2 2.2 76.1
90 12 13.0 13.0 89.1
100 10 10.9 10.9 100.0
Total 92 100.0 100.0
Table 4. Statistics.
N Mean Median Std.
Deviation
Minimum Maximum
Valid Missing
Question 3: What
percentage of your
annual sales is from
existing customers?
92 0 72.62 75.00 18.900 30 100
Table 5. Question 4: What is the average number of years your company retains customers?
Frequency Percent Valid Percent Cumulative Percent
Valid 1 3 3.3 3.3 3.3
2 4 4.3 4.3 7.6
3 9 9.8 9.8 17.4
4 7 7.6 7.6 25.0
5 17 18.5 18.5 43.5
6 8 8.7 8.7 52.2
7 19 20.7 20.7 72.8
8 7 7.6 7.6 80.4
9 8 8.7 8.7 89.1
10+ 10 10.9 10.9 100.0Total 92 100.0 100.0
Journal of Strategic Marketing 23
Table 6. Question 5: How important is customer loyalty to your company?
Frequency Percent Valid Percent Cumulative Percent
Valid Not very important 2 2.2 2.2 2.2
Very important 90 97.8 97.8 100.0
Total 92 100.0 100.0
Table 7. Question 6: Does your firm measure customer loyalty?
Frequency Percent Valid Percent Cumulative Percent
Valid No 67 72.8 72.8 72.8
Yes 25 27.2 27.2 100.0
Total 92 100.0 100.0
Table 8. Question 7a: What do you mean by extremely loyal?
Frequency Percent Valid Percent Cumulative Percent
Valid Customers
perceived value
87 94.6 100.0 100.0
Missing System 5 5.4
Total 92 100.0
Table 9. Question 7b: Do you consider extremely loyal the same as customer intimacy?
Frequency Percent Valid Percent Cumulative Percent
Valid Yes 57 62.0 100.0 100.0
Missing System 35 38.0
Total 92 100.0
Table 10. Question 8: Have any of your top five customers purchased from your competitors
during the last three years when you expected to receive the order?
Frequency Percent Valid Percent Cumulative Percent
Valid No 4 4.3 4.3 4.3
Yes 88 95.7 95.7 100.0
Total 92 100.0 100.0
Table 11. Question 9: How does your firm define customer retention?
Frequency Percent Valid Percent Cumulative Percent
Valid Continued sales 92 100.0 100.0 100.0
24 T. Carter
Additionally, the survey showed that 96% of the respondents reported having lost a
sale to a competitor from a top customer during the last three years when they
expected to receive the order. Thus, it is clear that the respondents could benefit from
improved customer loyalty. Therefore, it appears that there is a need to encourage
more businesses to implement special programs to improve customer satisfaction.
Firms are defining customer retention and agreeing that it entails maintaining
business and sales from customers, continued sales activity or keeping customers.
The research shows that 44% of firms are measuring retention through the use of
technology and 56% are measuring through other ways, such as surveys, or sales
revenue, but these firms are not measuring how to retain customers, which warrants
further study. While 97% of the respondents said that customer loyalty was very
important, only 27% measure customer loyalty, which accordingly should be better
tracked by firms. The idea of extreme loyalty being the same as customer intimacy
was acknowledged by 62% of the respondents and 92% see extreme loyalty as a
situation where customers perceive value and many firms recognize extreme loyalty
or customer intimacy as a consideration in customer dealings in business today.
Conclusion
Based on the Customer Retention Survey, some results corroborate the previous
literature and some results are new. In Question 1, all firms measure customer
retention, which corroborates the literature that says that measurement is important
to sustain a retention strategy (Jamieson, 1994). The results from Question 3 showed
that most firms get a high percentage of their annual sales from existing customers,
which corroborates the literature saying that retention is more lucrative than new
business (Oliver, 1999). Also, Question 5, which shows that most firms find customer
loyalty important, corroborates the importance of customer loyalty to customer
Table 12. Question 10: How many people are employed in your sales organization?
Frequency Percent Valid Percent Cumulative Percent
Valid 010 8 8.7 8.7 8.7
1125 9 9.8 9.8 18.5
2650 5 5.4 5.4 23.9
51100 9 9.8 9.8 33.7
101250 35 38.0 38.0 71.7
251500 6 6.5 6.5 78.3
5011000 7 7.6 7.6 85.9
1000+ 13 14.1 14.1 100.0Total 92 100.0 100.0
Table 13. Question 11: What is your position?
Frequency Percent Valid Percent Cumulative Percent
Valid Sales Manager 81 88.0 88.0 88.0
President 11 12.0 12.0 100.0
Total 92 100.0 100.0
Journal of Strategic Marketing 25
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retention as pointed out in the literature (Oliver, 1997). Last, in Question 9 all firms
defined customer retention as maintaining or keeping customers, which corroborates
the literature.
New findings from the Customer Retention Survey were seen in Question 2,
which indicated that many firms do not have special programs to develop customersatisfaction. The literature maintains that retention is improved with better
satisfaction (Ahmad & Buttle, 2002), strategies need to be explored for customer
retention (Jackson, Cunningham, & Cunningham, 1988) and there is a strong link
between customer retention and customer satisfaction (Williams, Spiro, & Fine,
1990). Other new findings are seen in Question 6 where most firms do not measure
customer loyalty and in Questions 7a and 7b, which show that firms recognize
extreme loyalty and establish it as a definition for customer intimacy different from
Wiersema (1996). Last, a new finding was shown in Question 8 that the majority offirms had their top five customers purchase from the providers competitors during
the past three years when they expected to receive the order instead. This new finding
indicates that there is a development in sales with customer defections that
particularly raises a customer retention concern for firms trying to protect business
coming from their top echelon of clients.
There is a need for further study on the role of customer intimacy on customer
retention. The findings from the Customer Retention Survey indicates that customer
intimacy has relevance in customer dealings. Last, it seems that sales organizationsimprove customer retention by promoting customer relationship building, providing
one-on-one interaction with senior executives from top customers, improving
communication, helping customer satisfaction and loyalty and ultimately offering
clients a superior level of value to prevent any defections.
References
Ahmad, R., & Buttle, F. (2002). Customer retention management: A reflection of theory and
practice. Marketing Intelligence and Planning, 20(3), 149161.
Ganesh, J., Arnold, M., & Reynolds, K. (2000). Understanding the customer base of service
providers: An examination of the differences between switchers and stayers. Journal of
Marketing, 64(3), 6587.
Jackson, D., Cunningham, W., & Cunningham, I. (1988). Selling: The personal force in
marketing. Santa Barbara, CA: John Wiley & Sons.
Jacob, R. (1994, 9 September). Why some customers are more equal than others. Fortune
215224.
Jamieson, D. (1994). Customer retention: Focus or failure. The TQM Magazine, 6(5), 1113.
Oliver, R. (1997). Satisfaction. New York: McGraw-Hill.
Oliver, R. (1999). Whence consumer loyalty?. Journal of Marketing, 63(1), 3344.
Stiglitz, J. (2003). The roaring nineties. New York: Norton.
Wiersema, F. (1996). Customer intimacy. Santa Monica, CA: Knowledge Exchange.
Williams, K., Spiro, R., & Fine, L. (1990). The customersalesperson dyad: An interaction
communication model and review. Journal of Personal Selling and Sales Management,
10(3), 2943.
26 T. Carter