Statistics and Business Research Method for Customer Retention

Describe about the Statistics and Business Research Method for Customer Retention.

Introduction:

In the modern world of business, the importance of customer retention is closely connected to the competitive advantage of an organization. In most of the empirical instances, it has been noticed that with a solid old customer base, the organizations can have a good potentiality in the future market. As opined by Khan (2012) in most of the cases it has been recorded that “increasing customer retention rates by 5% increases profits by 25%-95%”. This data fortifies the importance of customer retention in propelling the organizational profit in the modern business world. this particular research will be dedicated to explore how the customer retention strategies are being helpful in increasing the organizational profitability.

Research questions:

In this particular research project, the following questioned will be answered:

How the customer retention does influence the profitability?

How the new age companies can ensure customer retention?

What can be the potential recommendations for the companies to increase the customer retention?

Literature review:

Customer retention can be identified as the maintenance of the patronage of the customers who have previously bought a company’s offerings once and thus gaining a repetitive purchase. As discussed by Han and Hyun (2015) the customer retention occurs when a customer becomes loyal to the brand, loves its service and refuse to purchase from the competitors.

However, the idea of customer retention is largely dependent on the strategy of customer satisfaction. As opined by Siu et al. (2013) the satisfied consumers become loyal to the brand and continually patronize the company, increasing its earnings. Organizations with efficient “customer retention strategies” also gain from positive exposure via clientele blogs, feedbacks and social media contents.

As opined by Kotler, a satisfied customer talks favorably about the organization (Stahl et al. 2012). As mentioned by Tripathi (2014) it helps the organization in the promotion of the brand. Moreover, the customer who is loyal to the brand is relatively less price sensitive.  It helps the organization in collecting customers for its premium products. On the other hand, as opined by Han and Hyun (2015) as the satisfied customers loves to be loyal to the brand, it helps the organization in lowering down the cost of promotional activities. Moreover, in today’s business world, it has also been noticed that with the help of social networking of the companies, the loyal customers have helped the companies by providing innovative business and product ideas. 

As mentioned by Tripathi (2014) the probability of selling to a new customer is 5%- 20%, whereas, the probability of selling of a new product to an old and satisfied customer is 60% -70%. Hence, it is important for the organizations to ensure customer satisfaction, so that the customer retention can be achieved which will be helpful in making the organization viable in the future market.

Hence, it can be speculated that customer retention helps an organization in a multiple way and all these help in augmenting the profitability and reducing the marketing as well as the operational cost of the organization.

Research hypothesis:

H1: Customer retention increases the profit count of the organization.

H2: Customer retention does not increase the profit count of the organization.

Methodology:

Here, in the selected research project the descriptive research method will be used. A opined by Bryman and Bell (2015) this particular method helps in describing the situation with the help of the standing facts. Here, the same approach will be followed to explore the importance of customer retention on the organizational profit count.

On the other hand, a deductive approach will be used for the successful completion of this research project. As described by Zikmund et al. (2013) in this approach the theories will be consulted and hypothesis will be formulated, and finally, by analysing the data the hypothesis will either be accepted or be rejected. Here, in this study the same design will be followed.

Here, in the selected project both the qualitative and quantitative research will be made. As mentioned by Collis and Hussey (2013) the qualitative research will help in understanding the scenario with a broader view and in exploring the information which was not previously set to explore. On the other hand, as described by Bryman and Bell (2015) the quantitative research will help in obtaining the data which are mostly relevant to the research question and give a structured result.

Research process:

The research process will include the following steps:

Figure 1: Research process

Source: Developed by the author

Data collection and analysis:

This research project will involve the primary data collection procedure. As discussed by Collis and Hussey (2013) it will help in collecting the most authentic and fresh data for obtaining the research result.

Population:

The population will be the customers of various brands and managers of various well established companies.

Sample:

The sample will be 60 customers and 5 managers.

Sampling method:

Here, the simple random sampling method will be used, as the population size is huge (Bryman and Bell 2015).

The data collection tools:

Here, in the selected research an online survey will be done to the customers whereas, interviews will be executed with the managers. After having prior permission from the “customers”, structured questionnaires will be sent to them via emails. On the other hand, after having prior appointment, interview sessions will be conducted with the managers.

Data analysis:

A week later to the emails all the filled in questionnaires will be collected from the respondents. Moreover, the data collected from the interviews will be categorized and tabulated. Finally, with the help of the statistical software like Microsoft Excel, the data will be analyzed and presented in graphical forms.  

Expected outcome:

From the previously done literature review, it can be expected that a strong influence of the customer retention on the organizational profitability will be established. As discussed in the previously done studies, customer retention is being helpful for the organizations in creating brand awareness, promotion, cost cut and increased sell. Hence, it can be speculated that there is a strong possibility of the hypothesis 1 to be established.

References:

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Collis, J. and Hussey, R., 2013. Business research: A practical guide for undergraduate and postgraduate students. Palgrave macmillan.

Han, H. and Hyun, S.S., 2015. Customer retention in the medical tourism industry: Impact of quality, satisfaction, trust, and price reasonableness.Tourism Management, 46, pp.20-29.

Khan, I., 2012. Impact of customer satisfaction and retention on customer loyalty. International Journal of Technology Enhancements and Emerging Engineering Research, 1(2), pp.106-110.

Siu, N.Y.M., Zhang, T.J.F. and Yau, C.Y.J., 2013. The roles of justice and customer satisfaction in customer retention: A lesson from service recovery.Journal of business ethics, 114(4), pp.675-686.

Stahl, F., Heitmann, M., Lehmann, D.R. and Neslin, S.A., 2012. The impact of brand equity on customer acquisition, retention, and profit margin. Journal of Marketing, 76(4), pp.44-63.

Tripathi, M.N., 2014. Customer Satisfaction and Engagement-Customer Retention strategies for brand manager. Vilakshan: The XIMB Journal of Management, 11(1).

Zikmund, W.G., Babin, B.J., Carr, J.C. and Griffin, M., 2013. Business research methods. Cengage Learning.