CUSTOMER RETENTION STRATEGIES AND PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI CITY COUNTY, KENYA
Abstract
Customer retention has increased value to goods and service providing companies. Although there exists extensive research on the concept of customer retention, research on strategies used by commercial banks to retain their customers is limited. With the increased access to financial institutions, there is a frequent switching of customers from one bank to another due to varying competitive advantages. The study sought to establish how customer retention strategies adopted by a bank influence the financial performance of commercial banks in Nairobi City County. The study was guided by a general objective and four specific objectives. The main focus of the study was to establish how customer retention strategies influence the performance of commercial banks in Nairobi City County, Kenya. The specific objectives of the study included to determine the influence of service quality management, corporate image management, on performance of commercial banks in Nairobi City County. The study adopted a descriptive research design. The target population of the study was the customer relationship managers of all the 39 commercial banks in Kenya. Data was collected using questionnaires which was administered through a drop and pick method and online modes. Data was analysed using descriptive statistics, and inferential statistics such as regression and correlation analysis to establish the relationship between the variables. SPSS version 26 was used for data analysis.10% of the sample size was used for the pilot study to test for reliability and validity of the study. Cronbach Alpha value was above 0.7 and the Validity factor loadings were above 0.4.The descriptive results showed that the customer retention strategies like corporate image management and service quality management have a positive and significant influence on the performance of commercial banks in Kenya. The results imply that an increase in one unit of the variables leads to an increase in the performance levels of commercial banks in Kenya. The study recommends that improving customer retention strategies significantly increases the performance levels of commercial banks in Kenya.
Key Words: Customer Retention Strategies, Performance of Commercial Banks, Service Quality Management, Corporate Image Management
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