Competitive Strategies and Customer Retention Among Commercial Banks in Kenya
Abstract
In most cases business loses some customers, but few ever measure or recognise how
many of their customers become inactive. Most businesses, ironically, invest an
enormous amount of time, effort and expense building that init
ial customer
relationship. Customers’ satisfaction is a key ingredient in retaining customers, it is
important for the commercial banks to adopt competitive strategies in order to retain
existing customers in the business and also attract prospective custo
mers (Hunt,
2008).
The Kenyan banking sector is facing stiff competition in terms of customer
retention due to the increased competition in the sector.
Customer retention is the goal
of preventing customers from switching to the competitor. It is the way in
which firms
focus their efforts on existing customers in an effort to continue doing business with
them
. In order to retain their customers in a competitive market firms have been
forced to come up with strategies that will give them competitive advantage
.
Competitive strategy is a long
-
term action plan that is defused to help a company gain
a competitive advantage over its rivals.
This study therefore sought the
extent to
which competitive strategies influence customer retention among commercial banks
in
Kenya. The study adopted a descriptive survey design and targeted all the forty
four registered commercial banks in Kenya. The data was collected using
questionnaires using the drop and pick later method. The questionnaires were then
edited, coded and anal
yzed using the statistical package for data analysis (Version
20). The study concluded that
there is a significant relationship between cost
leadership strategies and customer retention.
The study also concluded that
banks use
low prices of the bank produc
ts to target average customers and also develops new
products that meet the market demands.
The study also concluded that
the banks
adopt differentiation strategies by offering superior goods and services of high quality
to their customers. The study also
concludes that differentiation influences customer
retention to a great extent. On focus strategy
the study concluded
that banks have
developed products that tar
get a particular market segment and that there is
a
measurable relationship between customer sa
tisfaction and customer retention in
banks.
The study recommended that banks should adopt cost leadership strategies so
as to attract and retain more customers, that banks should design products that are of
superior quality compared to that of the competit
ion so as to gain competitive
advantage that banks should embrace focus strategy and design products that target
different income classes and that banks adopt the various competitive strategies such
as differentiation, cost leadership strategies and focus
strategies so as to remain
relevant to their customers by offering superior products that are of better quality.
Publisher
University of Nairobi