Measuring and Managing the Benefits of Customer Retention

Abstract

Past research on the benefits of customer retention (BCR) has been characterized by the lack of a psychometrically adequate criterion. Research has primarily operationalized the BCR by using only repurchase intent or a factor score of several measures including repurchase intent, word of mouth, and price tolerance. In the process, it has ignored the possibility of a hierarchical ordering of the BCR measures that would lead to a unidimensional and cumulative BCR scale. In this article, the authors investigate this issue using a set of intent measures developed based on past work in customer retention, customer loyalty, brand loyalty, and satisfaction. As hypothesized, support is foundfor a unidimensional and cumulative BCR scale. The authors also investigate howfirms can use BCR along with satisfaction to monitor and manage customers. They propose that vendors use a customer management strategy that is based on managing both satisfaction and BCR.

Incorporating word-of-mouth effects in estimating customer lifetime value

“…Similar to results from other surveys, the satisfaction and loyalty measures are left skewed with a mean greater than 7 out of 10-point scale 3,22,23 In our data set, there are very few defections prior to the 12th month since the data set includes only customers who signed up for a one-year contract that binds them to pay the basic fee for 12 months, even if they drop the service before 12 months.…”

The effects of brand relationship quality on responses to service failure of hotel consumers

“…Moreover, Vázquez-Casielles et al (2007) found that the quality of past performance has a significant negative effect on the attributions of control following service failures. The higher the perception of previous service quality, the more likely consumers will attribute to the service organization high levels of competence and efforts to avoid service failures (Narayandas, 1998) (Fig. 3).…”

Quantitative analysis of semiconductor supply chain contracts with order flexibility under demand uncertainty: A case study

“…Increasing customer retention secures future revenues (Fornell, 1992;Rust et al, 1994) and can reduce the cost of future customer transactions (Reichheld and Sasser, 1996). As a consequence, net cash flows should be higher and prediction of future revenues should be more accurate as greater customer retention indicates a more stable customer base (Anderson and Sullivan, 1993;Narayandas, 1998).…”