Relationship marketing practices and their impact on customer retention in the commercial Banks in Kenya
The need for firms to remain competitive and successful in the long term has created the concept of Relationship Marketing, that is, establishing, developing, and maintaining successful relational exchanges, which constitutes a major shift in marketing theory and practice (Morgan and Hunt, 1994). Relationship marketing emphasizes on the value of retained customers and advocates that firms must be successful in retaining their customers if they are to grow profits and sales. Over the last few decades there has been a shift of the marketing theory and practice from transactional-oriented marketing to relational-oriented marketing. This is out a realization that maintaining customers already acquired is less expensive than acquired new ones. The study was designed with the aim of achieving two objectives: to establish the relationship marketing practices adopted by commercial banks, and to determine managers‟ perception of the effect of relationship marketing practices on customer retention. The data that were analyzed were gathered using a semi-structured questionnaire targeting relationship managers and/or marketing managers of the commercial banks. Out of the forty-five commercial banks that were targeted, thirty-four responded by returning filled questionnaires. This formed 75.6% response rate, which were considered adequate for analysis. To achieve the study objectives, respondents were presented with a number of relationship marketing practices and were required to score on a 5-point likert scale the extent to which the adopted by the commercial banks. The respondents were also required to indicate the extent to which they perceived the practices has effect on customer retention. The major findings of the study were that that all the twenty-four relationship marketing practices used in the study are adopted to a large extent by the commercial banks. The findings show that the mean scores of all the relationship marketing practices ranged between 3.00 and 3.99, hence satisfying the criterion that was set. Overall, the mean scores ranged from the low of 3.21 for “managing customers as important assets” to a high of 3.94 for “being innovative in market offerings in order to entrench attributes into the offerings that match consumers' ideal combination of attributes.” The findings indicated that the banks, to a large extent, have adopted relationship marketing practices that range from entering into one-to-one communication with customers up to and including ensuring adherence to laws and regulations governing the conduct of business and maintaining high ethical standards. The study findings also revealed that commercial banks have, to a large extent, adopted customer satisfaction practices. Key among them is that he banks strive to provide a range of quality products, appropriate to the customers' needs (mean score-4.09) and being speedy and efficient in handling customer complaints (mean score-4.06). With respect to the second objective, the study findings showed that all the relationship marketing practices presented to the respondents were, to a large extent, perceived to have an effect on customer retention. It was observed from the findings that most of the practices had mean scores ranging between 3.00 and 3.99, and only two had mean scores of 4.00 and above. Those practices that were found to be perceived as having the greatest effect include: Entering into one-to-one communication with a customer (mean score- 4.09) and ensuring adherence to laws and regulations governing the conduct of business and maintaining high ethical standards (mean score- 4.06). The rest were perceived to have effect to a large extent. It was however noted that in both the extent of adoption of relationship marketing strategies and the extent of their perceived effect on customer retention, there were variations among respondents with respect to degree to which the banks adopted the practices and their effect on customer retention. Nevertheless, it was concluded that the results of the study showed a significant shift by commercial banks from transactional- oriented marketing practices to relational-oriented marketing practices.