Impact of Customer Retention Practices on Firm Performance

Abstract

Customer retention has become the buzzword among both practitioners and academics due to its significant impact towards the improvement in firm performance. Though firm performance is normally evaluated using financial measures, this paper has utilized non-financial measure i.e. customer satisfaction. This is due to the appropriateness of its application to measure performance of service-oriented (retail) firms. This study was conducted using mall-intercept surveys at AEON Perak, Malaysia whereby, it collected 200 completed questionnaires. Hierarchical regression analysis was employed to examine the impact of customer retention towards firm performance alongside with the demographic profiles as the moderator. Four dimensions of customer retention namely word-of-mouth, price insensitivity, repeat purchase and non-complaining behavior as well as demographic profiles are found to significantly influence firm performance (customer satisfaction). Hence, it is recommended that practitioners should be more considerate towards enriching the said dimensions of customer retention in order to leverage its promising potential. Keywords: