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An Essay on Customer retention strategy in Marketing companies

Updated on September 27, 2015
Padmajah Badri profile image

A freelance writer,academic consultant,HR manager with a passion for writing and reading.


Customer Retention is the defined as the sequence of the processes followed to attain longevity of the relationship with its customers. In this report we will identify the actions involved to improve customer relationship through effective strategies with the objective to retain profitable customers and promotion of customer loyalty schemes.The retail market is diverse with segmentation, involving a lot of complex challenges and has more reach in the market through globalization.

Literature review

Strategic marketing planning is defined as an organization based planning designed in a way to understand the market opportunities, correlate the opportunities with the external environment and target audiences. While planning for strategic marketing the expected decision must be focused on the vision, mission, resources available and internal strengths of the company.(Hanna an 1992; Kotler & Andresen 1996; Andresen & Kotler 2003; Meek & Meek 2003). It is also evident that the strategic marketing planning is regarded as sub process in the context of corporate planning. (Gardner & Thomas 1985; Schendel 1985; Hanna an 1992; Meek & Meek 2003).

Corporate management is a process of directing an organization either by deploying or manipulating resources to achieve higher rates of profit and also customer satisfaction. The above strategies and values of strategic planning are analyzed to identify the Strength, Weakness, Opportunity and Threats (SWOT Analysis) of the company with respect to the competitors. Interpretation of analysis reveals that the entire organization in involved and work together as a big task forces to achieve the goals of strategic planning. Apart from investigating the weakness and strengths of the company, strategic positioning is also an integral aspect of strategic marketing planning (Kotler & Andersen 1996; Hooley et al. 1998; 2001) for customer retention.

According to Chew (2003), strategic positioning is regarded as the differentiation in the level of positioning from the others who belong to the same society. It is justified that strategic positioning allows organizations to have a competitive advantage over their opponents. One of the disadvantages of competitive advantage does not ensure the continued success of the organization. The retail marketing firm focus on the sustainability in order to create a competitive edge among the similar opponents projecting themselves one step ahead as compared to the competitors. (Porter 1985).

According to Proctor (2000), the concept of competitive edge is important since it influences the success of a business venture to a greater extent. Proctor reiterated that competition not only involves production and distribution of products but also focuses on the level of customer satisfaction and retention achieved by addressing the needs of the customer. Effective Market Positioning, choice of target base, promotional activities will enable the company to sustain in business arena.

Choice of Analysis method

It is very critical to get an insight on the factors influencing the customer perception with respect to the company’s products and services. One of the proven methods to identify the critical facts is to implement a PEST analysis. PEST stands for political, economic, socio-cultural and technological forces. These factors affect business to a greater extent through the customers and are highly reliable in shaping up the perception of the customer and create an influential increase in the purchasing power of the target customer base.

Competitive analysis can be effectively done using Porter’s Five Force and SWOT analysis to understand the competition. The objective of the SWOT analysis is to determine the presence of factors favouring the business in achieving its goals as well as factors hampering its improvement in both internal and external environment. By doing the SWOT analysis, the company will be able to analyze the pros and cons of the existing system by matching their resources and competencies in a competitive scenario.

On the other hand, Porter’s Five Forces Model states that strategic planning in business is influenced by five coercive forces namely power of supplier, threat of substitutes, buyer power, barriers to entry and rivalry. This model also provides more insight on the relevance of business approach and the marketing concepts adopted for feasible operation. Porter’s five principles determine the competition level and also identify the occurrence of potential threats proactively like discounting a customer or change in customer preferences or loyalty for planning effective contingency management.

Recommended practices to achieve Customer Retention

The references from various customer retention strategy sources reveal certain important recommendations for retailers in order to retain the customers. The specific recommendations are listed below.

  • It is advisable to use carrot as approach rather than sticks to encourage more sustainability in the market scenario.
  • It is very important to influence the purchasing power of the customers by using powerful strategies involving mass dynamic change and build the building blocks of customer loyalty
  • Educate consumers on the availability of various options through effective communication channels and ensure that there is simplicity in the communication and it is wise to use visual media for more clarity on the message.
  • The prime objective of the retail chain is to ensure consistency in performance and deliver goods and services on time with a quest for customer satisfaction
  • Help people by providing them with the information they need to encourage ‘green’ behaviours which greatly influence customer satisfaction:
  • To devise strategy on customer retention considering the nature of model and desired brand and deciding on appropriate promotional activities influencing customer interest and loyalty towards the retail segment
  • The primary focus of the retail segment is to engage, communicate and demonstrate key customer objectives which are planned by the customer
  • A significant change can be brought in the retail segment by working together and also based on collaboration between retailers themselves and other key stakeholders (like sustainability experts, government and the media) .These retailer act as the key determinant for establishing a change.


The entire report focuses on strategic approach of the complex issues faced by retail organizations face at a strategic level.There is also application of market strategies like segmentation, positioning and SWOT analysis discussed in detail for more analysis and information pertaining to the advantages of customer retention in a business perspective.


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    • Padmajah Badri profile imageAUTHOR

      Padmajah Badri 

      3 years ago from India

      Thank you Flourish Anyway.I appreciate your time t read my hub and say nice words.

    • FlourishAnyway profile image


      3 years ago from USA

      Nicely summarized.

    • Padmajah Badri profile imageAUTHOR

      Padmajah Badri 

      3 years ago from India

      Thank you Akriti

    • Akriti Mattu profile image

      Akriti Mattu 

      3 years ago from Shimla, India

      Well written :)


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