Customer Retention Practices Among the Major Retailers in Malaysia

Since the last decade, many companies perceive the retention of the customer as a central topic in their management and marketing decisions. A firm can increase profits by 25-95 percent if it could improve its customer retention rates by 5 percent. A retained customer will be loyal due to the attachment and commitment to the organization. This customer will, then, recommend others to purchase and repurchase the companies’ products and services. Review on past literatures indicates that studies on customer retention concentrated more on the manufacturing sector over the retailing despite its growing importance as a major service sub-sector. This study explores literatures pertaining to the factors that influence customer retention and its measures at great length. Factors such as top management support, switching costs, perceived service quality, customer satisfaction, interaction with customers, pricing, membership and employees are found to significantly influence the customer retention rate while customer retention rate can be measured by evaluating their characteristics in terms of repeat purchases, willingness in spreading positive word of mouth (WOM) about the company to others, insensitiveness towards the changes in pricing of products and attitude of praising (not complaining). Based on the thorough literatures done, a theoretical framework is proposed and some possible recommendations are put forward for future researches.