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