Understanding the Effect of Customer Relationship Management Efforts on Customer Retention and Customer Share Development

TLDR

Scholars have questioned the effectiveness of several customer relationship management strategies, while customer relationship perceptions are defined as evaluations of relationship strength and supplier offerings, and customer share development refers to the change in customer share between two periods. The author investigates the differential effects of customer relationship perceptions and relationship marketing instruments on customer retention and customer share development over time. The results show that affective commitment and loyalty programs that provide economic incentives positively affect both customer retention and customer share development, whereas direct mailings influence customer share development; however, the effect of these variables is rather small, and firms can use the same strategies to affect both customer retention and customer share development.

Abstract

Scholars have questioned the effectiveness of several customer relationship management strategies. The author investigates the differential effects of customer relationship perceptions and relationship marketing instruments on customer retention and customer share development over time. Customer relationship perceptions are considered evaluations of relationship strength and a supplier's offerings, and customer share development is the change in customer share between two periods. The results show that affective commitment and loyalty programs that provide economic incentives positively affect both customer retention and customer share development, whereas direct mailings influence customer share development. However, the effect of these variables is rather small. The results also indicate that firms can use the same strategies to affect both customer retention and customer share development.