Customer Retention Strategies - A Case Study in B2B Service Context

Abstract

Customer retention has often received less attention among scholars and practitioners than customer acquisition even though there is a lot of evidence that it has a major impact on customer lifetime value, profitability and the overall company performance. The objective of this study is to examine the factors and strategies positively affecting customer retention, specifically in business-to-business (B2B) service context, and by that, to increase understanding on the issue as well as to suggest actions for further development of customer retention in the case company. First the previous research on the topic is reviewed, and based on that, the theoretical framework is compiled. The empirical part is conducted as a qualitative case study with semi-structured personal interviews of senior key account managers of the case company’s Nordic division.

The results of the empirical part support the findings of the previous research: the key factors for B2B customer retention in the case company are the value customer receives from a service, compared to the value provided by alternatives, and the relationship that is built during the different stages of a service process. These factors affect important preconditions for customer retention: satisfaction, trust and loyalty intentions. In addition to the positive retention factors, also customer switching costs as a negative factor, and external environment effects influence the level of customer retention.

The most important retention strategies, mainly affecting the customer value, are the following: building superior service quality, customer-centricity, innovations and customer solutions, cross-selling, and especially effective communication of customer value which clearly arises in the empirical data. The important relationship related strategies are customer management approaches emphasizing proactivity, after-sales follow-up & support and locality, as well as key account management operations together with the supporting information systems. Additionally, managing price perceptions, customer engagement initiatives, effective service recovery and utilizing social networks also have a role in the B2B customer retention.

The empirical findings are compiled into a summary table that can be used as a check-list to evaluate how the case company is performing with regards to each strategy and what should be further developed. The findings of the study can also be applied in wider context, in other companies operating in different fields of B2B service sector.