Influence of customer retention strategies on the organizational performance of commercial banks in Thika town

Abstract

Customer retention, as a concept, has grown in acceptance by players in the services sectors. Extensive research studies have been conducted on strategies employed in customer retention. However, there is insufficient research on what links organizational performance of firms and customer retention strategies. The research objectives were to establish how strategies employed in customer retention influenced commercial banks’ organizational performance of in Thika Town of Kiambu County. In the literature review, the researcher reviewed three theories in the theoretical framework to demonstrate the connection between customer retention strategies and organizational performance of commercial banks. Among the concepts were the Loyalty Effect, Social Exchange, and Customer Bonding. The study's population consisted of 227 employees from Thika's 22 commercial banks, and it was conducted using a descriptive research method. The study used purposeful sampling, which included branch management, supervisors, and other customer-facing staff from the 121 target institutions at the time. A questionnaire with both open-ended and closed-ended questions was used as the study tool. Version 21 of the Statistical Package for Social Sciences was used to analyze the data. To determine the direction and connection of variables, the researcher used correlation and regression analysis. Based on the objectives, the findings were recorded using frequencies, charts, and tables. Commercial banks used a variety of distribution channels for their services, including mobile banking, POS Terminals, Agency banking, and Automatic Teller Machines, according to the survey. According to the findings, the success of Commercial Banks in Thika town was aided by the development of loyalty and rewards programs, a strong corporate image, and the supply of high-quality services. As a result, banks must continue to innovate in distribution and implement high-quality service methods. Banks can also continue to improve their performance by investing in loyalty and rewards programs and enhancing their corporate image.