Introduction
With increased completion businesses are quickly realizing that loyal customers and adopting new strategies for customer retention is primary for their profitability. The main aim of customer retention strategies is to increase the purchasing power of a customer and to also to maintain good relation with the customer to keep them loyal to the firm. Customer retention strategies are related to customer relationship management due to the underlying fact that long-term customers are profitable. Reichheld conducted an empirical study that indicated that increased profits are directly related to customer retention rates. Further he explained that a 5% retention increase had a direct impact on the net value of the business from 95% for advertising agencies and 35% for computer software businesses. Some studies have focused on the primary reasons for customer retention such as customer satisfaction and competitor’s offerings (Reinheld, F. 2003, 23).
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What is customer Retention?
A number of literatures have defined what constitutes customer retention. Swift in his paper Accelerating relationship[s using CRM and relationship technologies describes retained customers as those who are loyal, and profitable to the business. Fill in marketing communication: contexts, strategies and applications describe customer retention as that deep relationship established between a business and a customer where the customer’s individual goals are met (Swift, R. 2001, 19). In some circumstances, customer retention is achieved where the customer lacks options as described by Jones et al. (2007, 45). In this scenario the customer is forced to come back because they have no alternatives.
On the other hand, Heskett, Sasser and Shclesinger (1997, 4), state that customer retention exists where there is a deep active relationship between the customer and the service provider. This relationship creates better understanding of the needs of the customer and he or she is served well making the customer return for the same service or a similar one.
Background and Problem Discussion
Various studies have focused on customer retention being less expensive that acquisition and focus, (Reichheld, F. 1996, 23). Other studies indicate that very few businesses invest in customer retention strategies and that some spent only a quarter of their marketing budgets on retention of their customers. Reichheld and Sasser emphasizes on the importance of customer retention. They add that retaining of 5% of the company’s customers can increase the profits and sales of the business by 100%. Consequently, a study by Heskett, Sasser and Schlesinger (1997, 40) provide for the successful retention strategies from the experience of MBNA Credit Card Company. For example MBNA called each of the customers who stopped using their card services. It also collected data feedback from defected clients to help it adjust its service delivery process. With this information, after eight years MBNA reported an increase in profits sixteen times. Retention of customers should therefore be made part of the market planning process for any business (Ahmad and Battle, 2001, 36). Focus on customer satisfaction in one way of achieving maximum customer retention.
Rank Xerox in Denmark conducted a survey asking its customers to rank their satisfaction levels on a scale of 1 to 5, with 5 being the best satisfaction. The result of the survey indicated that those who ranked their satisfaction level as 5 were 93% of the total survey population and it is this number that returned to make a subsequent purchase. The rest who chose 4 as their satisfaction level did not return to make any subsequent purchase (Bergman, Klefsjo, 2003, 330). The experience of Rank Xerox shows that, the level of customer satisfaction is directly related to customer retention. It is right to conclude that there is connection between customer retention and the profits or sales of a company. Retention of customer strategies is less expensive and more profitable.
Statement Problem
There is growing interest on the importance of customer retention to boost sales for small scale businesses. This interest is derived from competition, the need to make profits and the need to remain relevant in the market. This study is aimed at assisting the management of Supermarket A to maximize profits through customer retention strategies such as customer satisfaction, improving customer relations, prioritizing retention as the yearly market plan, and product and service integrity
Research Question
What Supermarket A can do to Retain its Customers?
Hypothesis
The aim of the research is to analyze why customers come back to Supermarket A and what influences their decisions.
Research significance
In this study, we look at what is important for the supermarket’s customers in order for them to come back. In return, we look at what the supermarket can do to increase retention of the customers. Understanding of the current customer retention techniques is essential for the improvement of sales for the supermarket. In addition, the approaches will assist the supermarket management to understand the customer services that is customers need. Consequently, this will boost sales of the products. The results of the study can be applied in similar businesses to improve their sales by simply improving on the customer retention techniques. They will be able to understand the influence of customers and why they return to the service provider. Additionally, the business managers can use the results of the study as a tool to increase retention rates by adjusting the services within their business.
Purpose
The primary goal of the study is to understand whether the improvement of the current customer retention strategies that Supermarket A uses will boost its sales. Additionally, the study will explore additional current customer retention strategies that Supermarket A can use to overcome competition from its competitors to help it retain and attract more customers. Therefore, the study will look at factors that attract, contribute to customer retention and improvement of Supermarket A, customer services to retain their customers. The study will establish the relationship between current consumer retention strategies and improvement of sales.
Research Methodology
This empirical research will highlight reasons why customers come back to the supermarket. For the purposes of establishing these reasons, the qualitative approach of empirical research shall be used. The results will then be discussed together with the supermarket manager during the interview, taking a qualitative approach in order to get professional comments and opinions on the findings. This will be important to increase Quality of results interpretation.
Primarily, the Quantitative research method is used to predict, provide explanations for measurable phenomenon such as variables (Leedy, O. 2001, 101) the Quantitative approach is said to therefore focus on a known variable. Being the nature of quantitative approaches being deductive, the phenomenon explained is retention of the supermarket customers with the sample variables (Bryman & Bell, 2007, 1). Use of the quantitative approach will cover a larger and bigger population sample, compared to the qualitative approach. This way the larger samples of respondents will be larger making it possible to create any kind of generalization needed.
The empirical research will adopt the interview method containing both closed and open questions. Open questions allow respondents to answers the questions in their own words. The wide variety of answers received is important for the researcher since it increases not only their knowledge on the subject but also knowledge on what the customers’ desire. Closed questions on the other hand, according to are usually easy to process in the data analysis phase. They also increase the possibility of comparing answers( Bryman & Bell, 2007, 7).
The formulation of the hypothesis shall be in the theoretical background section, the reasons for supermarket A customer retention are adopted from the 8Ps of Service Marketing Model. Lovelock and Writz extended the traditional 4 Ps Model calling it the 8Ps model of service marketing. These are price, product, time, place, promotion, education, physical environment, process, people, productivity and quality elements (2007, 637). As mentioned earlier the second part of the interview shall consist of closed questions. This are primarily for the purposes of evaluating the importance of each service element offered in the supermarket as adapted by the 8Ps model for customer retention.
This research will adopt the mixed method of both the quantitative and qualitative research methods. This two-pronged strategy involves the combination of qualitative and quantitative research approaches, techniques, methods, concepts in a single study. The qualitative approach research is designed to finding solutions to particular questions. It aims at the production of factual descriptions based on knowledge obtained from face to face interactions with individuals and social behavior in their natural settings. With this kind of approach the customers themselves can give solution to the question problem by providing the best customer retention strategies. The data collected in a qualitative approach is usually in detail revealing more information about the respondent behavior. The results obtained from the qualitative approach are usually descriptive. Qualitative approach is common for conducting market research and the research may be conducted in person, via telephone or via internet.
The quantitative approach on the other hand, relies primarily on quantitative data collected. The data can then be used to quantity behavior, opinions, suggestions, and attitudes from the large sample being studied. The various quantitative methods of research include online surveys, paper surveys, telephone interviews, online polls, and longitudinal studies just to mention a few.
Data Collection and Research Methods
The research study shall use both secondary and primary data which will be obtained using the mixed research method. Primary research method shall include interviews, surveys, and standard questionnaires. The secondary research methods will consist of online articles, journals and annual reports of similar business. The research will be aimed at reviewing, journal papers, and related literature.
The qualitative aspect of research shall be for the purposes of collecting information, understanding information. It will focus on customer behavior on why and how they make decisions. The samples that will used for this research will be divided into smaller portions, for instance the customers who visits Supermarket A, will be divided into male of female, they shall also be divided into their age clusters. A qualitative research method is aimed at giving answers to specific studies and general conclusions on informed actions. Additionally, qualitative research is aimed at finding the processes and practices rather than the outcomes. Therefore, the focus of the study using this research approach will focus on the experiences the customers have had while shopping at Supermarket A. An observer will observer the shoppers and note down their behavior.
Interviews
In depth interview will be used to collect data for this study. It will include conducting intensive individual interviews will a smaller group of respondents to explore their experience while shopping at Supermarket A. The interview questions will also aim at finding out the customer retention strategies that will make the shoppers come back. As mentioned earlier the interview questions shall be both open and closed. The interview format shall adopt a relaxed and flexible mode to create a rapport with the respondents. Having interview questions that are flexible will encourage probing into personal experiences of the shoppers. Another importance of in-depth interviews is that they provide more detailed information about the shopper’s behavior, thoughts and allows for the exploration of new information (Boyce & Neale, 2006, 4). Therefore, using both open and closed questions will guarantee detail information and understanding of the problem under research.
Observation will also be another data collection method used. An observer will be stationed at the Supermarket A and will be required to observer the purchasing behavior of the shoppers, how comfortable they seem with for example the freshness of the groceries, the customer care services. It will also identify the most frequent shoppers of the shop. This data collection tool will provide first hand information about the shopper’s behaviors. Direct observation is essential since it helps identify habitual routines that some people are hardly aware of. Through observation we shall be able to understand the behavior of both the customer and the customer care offered by Supermarket A, for example how the issues and complains of shoppers are addressed.
Sampling
Sampling will be used. Sampling involves selection of individual people or data from the target research population. The target population is this case is the customer of Supermarket A. Lavrakas defines a population as an infinite or finite collection of individual elements (2008, 62). The sample size used will be of 40 participants. Lavrakas defines a sample as a smaller group obtained from a target population that has been selected to be a representative of the entire population with all the relevant characteristics (2008, 60). The primary aim of the study will be to include participants from all age groups and societal setting. The recruitment of shoppers of Supermarket A will take place at the shop itself; visit to nearby residential homes and online. In this way there shall be a wide range of representation of the shoppers.
Data Analysis
The study will use the Holloway’s strategy for data analysis (1997, 3). This is because the analysis will involve breaking down the day and getting codes and categories that are later transformed into themes. The thematic approach shall be used for analysis purposes. It shall have the following processes, organizing and ordering the data collected, re-reading the data, breaking the data collected into manageable parts, identification and selection of important phrases, searching for relationships and linking the categories together, identifying and describing themes, patterns and interpreting and looking for meanings. The audio taped used for interviews shall already been transcribed, checked for accuracy and printed.
Gantt chart
Attached is Gantt chart, Appendix 1. The Chart represents the start and completion dates of the whole Research paper from research proposal to the last chapter. The duration set for completion of the whole project is 6 months. So far the research proposal is still in its initial stages and will be complicated on the date set in the gnat chart.
This is a research proposal and there are various challenges that may come with it. They include, poor time management, supervisor related factors, institutional factors and natural challenges such as diseases and accidents. With all these factors in mind it is easy to overcome most of them and successfully complete the research project on time.
Supervision of research project is necessary for its completion. The supervisor is expected to advise the student in project management, by ensuring they produce quality work. In addition the supervisor is required to provide emotional and psychological support that the students needs. They can advise on effective use of time, avail themselves for regular contact with the student and offer constructive criticism. If this roles are not played well then this may pose a challenge to the student. To overcome this challenge the student should adhere to schedule set by the supervisor and ensure that they follow instruction given. The student should also consult regularly with the project supervisor to ensure production of coherent and logical research papers. Unnatural factors such as accidents and falling sick may be a challenge to completing a research project on time.
Another challenge that maybe encountered in the course of this research project is poor time management. Time is very critical for the completion of a research project. It is for this reason that a Gantt chart has been created to overcome this challenge. Having a timetable that is followed to the letter is very important to meet and beat deadlines set. Students who intend to finish there research project on time then they must spent 20 hours per week in their projects. The attitude of a student is also likely to be barrier to completion of the project on time.
Ethical issues that may affect the proposed project and how they may be addressed
Ethics in research provide for the rules that should be followed when undertaking a research project. One ethical issue is honesty in the presentation of data results. Researchers are required to maintain high degree of honest when presenting their research results. The results should reflect the true response of respondents in that particular research.
Objectivity is another ethical issue to consider in research projects. The researcher must avoid bias in data analysis, data interpretation and other research tasks. Another ethical issue is recognition of previous research that is used in the research project. Plagiarism is an offence and it is important for researchers to recognize work that is borrowed from other sources. Plagiarism is an offense that may result to cancelation of the whole project. Citing sources that have been quoted or paraphrased show that the student has understood the research question; the paper was well researched and hence strengthens it. Students should seek permission before using unpublished data and material. The main aim of this ethical rule is to ensure students give credit where it is due.
Voluntary participation of research participants is a very important ethical concern. All respondent of the research should voluntarily consent to participate in the research project. In cases where the respondent is under age then the consent of the parent or guardian should be sought first. To avoid such incidences it is better to have respondents who are all adults.
Privacy and confidentiality is another ethical issue to consider in research. Some respondents may not want to give their personal or home address information. As a researcher it is important to consider this aspect especially when interviewing the client. Sometimes the research problem does not really need the personal information of the respondent in this case to avoid conflict with the respondent one can do away with this details. Privacy protects respondent from being identified in publications. Privacy can be protected through collection of data using coded data techniques such as respondent A or 1. If a degree of privacy is not provided for then some respondents may not agree to be part of the research.
Time is another ethical issue in research that is overlooked from time to time. Just like you have created a work plan for your research then the respondent need to be informed of important information such as how long the interview will take, how long you are going to stay with the information they provide.
Chapter Summary
The chapter is the project research proposal on Supermarket A on how the Supermarket can retain its customers to improve sales. The chapter contains a brief introduction that explains the different aspects of customer retention strategies. Then there is a section that explains and defines customer retention. It includes details of the research question, hypothesis and the reasons for writing this paper. Consequently, the chapter explains the significance of this study and how research shall be conducted. The methods for data collection are also included and the data analysis techniques. The chapter includes a Gantt chart that gives the timeline for completion of the research project. It addressee the challenges likely to be encountered, and the ethical issues to adhere to.
References
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Jones, M.A. et al., 2007. The Positive and Negative Effects of Switching Costs on Relational Outcomes. Journal of Service Research, 9(4), 335-355.
Leedy, P.D., Ormrod, J.E., 2001. Practical research : planning and design, 7th ed., Merrill Prentice Hall, Upper Saddle River.
Lovelock, C. & Wirtz, J., 2007. Service Marketing.People, Technology, Strategy, 6th ed., Pearson Prentice Hall, Upper Saddle River.
Reichheld, F., 2003. The One Number You Need to Grow. Harvard Business Review, December 2003.
Reichheld, F.F. & Sasser, W.E., 1990. Zero defections: quality comes to services. Harvard Business Review, September-October 1990.
Swift, R.S., 2001. Accelerating Customer Relationships Using CRM and Relationship Technologies, Prentice Hall PTR, Upper Saddle River.
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