Customer Retention

Full text

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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Customer retention is not only a cost effective and profitable strategy, but in today’s business
world it is necessary. This is especially true when you remember that 80% of sales come from
20% of customers and clients. (Lake Laura, April 2008).
Customer Retention is the activity that a selling organization undertakes in order to reduce
customer defections. Successful customer retention starts with the first contact an organization
has with a customer and continues throughout the entire lifetime of a relationship. A company’s
ability to attract and retain new customers, is not only related to its product or services, but
strongly related to the way it services its existing customers and the reputation it creates within
and across the marketplace. (Reicheld Fredrick, 1996).
Customer retention is more than giving the customer what they expect; it is about exceeding their
expectations so that they become loyal advocates for the brand. Research by Fleming and
Asplundh, (Feb.2009) indicates that engaged customers generate 1.7 times more revenue than
normal customers, while having engaged employees and engaged customers returns a revenue
gain of 3.4 times the norm Customer retention refers to keeping a client's business rather than
have the client use competitors' services or products. Businesses want to reduce customer
defections to their competitors because a reduction in their market share and profits could result
in a collapse of the company. Customer service retention is a popular marketing strategy as it
involves focusing on meeting or exceeding clients' expectations in order to maintain their

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loyalty. When people feel loyal to a certain brand or business, they are less likely to be
persuaded by a competitor's adverts and offers.
Today’s companies are facing their toughest competitive ever. Companies are now moving from
products and sales philosophy to a marketing philosophy. John Chambers, CEO of Cisco systems
2000, said “make your customer the center of your culture of your company” that companies
need to rapidly move into the new economy and employ internet, wireless and other technologies
to achieve a competitive advantage which means companies must be think of producing what the
customers expect from them. (Kotler, 2008)
1.2 Statement of the Problem
Many companies think that marketing is all about selling of products and how the company will
increase its profitability in the market share and not considering after sales service to be able to
know whether the customers are satisfied with the products are able to use it.
The main problem is ‘what kind of strategies is expected from telecommunication industries to
be able to retain their customers?’
1.3 Research Objectives
1. To identify the customer retention strategies used.
2. To identify the extent to which the customer retention strategies are used by the
organization.
3. To examine the challenges that the organization face in retaining their customers.
4. To examine respondents perception of customer retention strategies.

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1.4 Significance of the Study
1. To help the organization to implement the right customer retention strategies.
2. To develop a good employee-customer relationship.
1.5 Scope and Limitations
Retaining customers depends on how the industry sells its products to their customers. This
research is limited to Vodafone Ghana Ltd and Vodafone users. These are some limitations of
the research;
 The most prominent is the data collection since most respondents sometimes feel
reluctant to provide information to the questions in the questionnaire.
 Time which is of essence has been limited due to the fact that, the researcher will
combine the project with course work in less than a year.
 The lack of funds to travel out and also prepare adequate questionnaire for circulation
in gathering data is another potential problem area.
 Inadequate text books to research on.
1.6 Organization of the Study
This study consists of five main chapters:
Chapter I covers the introduction of the work, research problem, objectives, significance of the
study, scope and limitations and organization of the study.
Chapter II presents a review of literature.
Chapter III looks at the research methodology

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Chapter IV deals with data presentation and analysis.
Chapter V concludes the research with a summary of the study, conclusion and recommendation,
this chapter also the reference and bibliography.
1.7 Operational Definitions
 Customer: A person or an organization that buys products or service from a shop or
business.
 Retention: Is to keep, hold on or maintain something.
 Customer profitability: is the difference between the revenues earned from and the costs
associated with the customer relationship in a specified period.
 Average customer: Are customers that patronized products when prices are reduced.

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CHAPTER TWO
LITERATURE REVIEW
2.1 Overview of marketing
Kotler, Armstrong, Wong, Saunders (2008), defined marketing is the process of
performing market research, selling products and or services to customers and promoting them
by advertising to further enhance sales. It generates the strategy that underlies sales techniques,
business communication, and business developments. Customers build strong customer
relationship and create value for their customers through marketing. The term marketing concept
holds that achieving organizational goals depends on knowing the needs and wants of target
markets and delivering the desired satisfaction. It proposes that in order to satisfy its
organizational objectives, an organization should anticipate the needs and wants of consumers
and satisfy these more effectively than competitors. Marketing is used to identify the customer,
to satisfy the customer, and to keep the customer. With the customer as the focus of its activities,
it can be concluded that marketing management is one of the major components of business
management.
The American Marketing Association (2007), define marketing as an organizational function
and a set of processes for creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its stakeholders

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2.2 Customer Retention
Customer retention can be defined as how companies or organizations are able to
maintain the existing customers’ base on establishing good relations with all who buy the
company’s product, (Kotler, 2008). Customer retention marketing is a tactically driven
approach based on customer behavior. Johnson (1998) outlined some philosophies of
retention-oriented;
1. Retention marketing requires allocating market resources: the company has to
realize some marketing activities for customers in order to generate higher profits
in the company. The company can keep their budget flat or shrink it while
increasing sales and profits.
2. Active customers are retained: customers are likely to feel they are in control and
smart about choices they make and they like to feel good about their behavior.
Marketers take advantage of this by offering promotions of various kinds to get
consumers to engage in a behavior and feel good about doing it.
3. Retain customers’ means keeping them active with the company. If the company
does not keep them active they will slip away and eventually no longer be
customers.
4. Marketing is a conversation between customers and the marketer. Marketing with
customer data is a highly evolved and valuable conversation but it has to be
backed and forth between the customer and the marketer because the marketer
must listen to what the customer is saying to better their products or services
offered.

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2.3 Attracting Customers
Customers are smarter, more price conscious, more demanding when products are not
conducive to them and offered better products from competitors. According to Cooper and
Kaplan, (May-June 1991), it is not to produce satisfied customers because several competitors
can do this but is to produce delighted and loyal customers. This means customers are not only to
be satisfied with products and services but must be retained in the company. Companies seeking
to expand their profits and sales have to spend time and resources searching for new customers.
To start, the company develops adverts and places them in media that will reach new
prospects, it also sends direct mail and makes phone calls to attract new prospect.
According to Gitomer (1998), to attract new prospects, the company can use;
a) Product Development: which involves the development of new products for existing
market in order to;
i) Meet changing needs of customers.
ii) Match new competitive offerings.
iii) Take advantage of new technology.
iv) Meet the needs of specific market segments.
Product development is appropriate when changing needs and tasks results in the emergence
of new segments or when competitive and technological changes motivate firms to modify
their product lines.
b) Packaging: Is the development of a container and graph design for a product. It is all the
activities involved in designing and producing the container or wrapper for a product.

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c) Promotions: It is the use of any short-term incentives to encourage customers to interact
with the company.
d) Advertising: Is a paid form of non-personal communication about a company, its product
or its activities and used to inform, persuade and remind.
2.4 Computing the Cost of Lost Customer
Kotler (2008), attracting customers is not enough to be able to retain customers in a
company. Many companies suffer from high customer churn or customer defection which is
the average number of customers who leave a service or buy another product during a period
of one year,
There are some steps that a company can take to reduce the defection rate of its customers;
 The company must define and measure its retention rate, thus measuring the number of
times in losing a customer.
 The company must distinguish between the causes of customer attrition and identify
those that can be managed better because much can be done to customers who leave the
company due to poor service, inferior products or high prices.
 The company needs to estimate how much profit it loses when a customer is lost because
the lost profit is equal to the customer’s lifetime value which is the present value of the
profit stream of a company.
 The company needs to figure out how much it would cost to reduce the defection rate.
 The company must listen to what customers say about services or products.

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2.5 The Need for Customer Retention
According to Senge (2001), most marketing theory and practice centers are on the art of
attracting new customers rather than on retaining and cultivating existing ones, the emphasis
traditionally has been on making sales rather than building relationships. A company would be
wise to measure customer satisfaction regularly because the key to customer retention is
customer satisfaction. A highly satisfied customer stays loyal longer, buys more as the company
introduces new products and upgrades existing products, talks favorably about the company and
its product, pays less attention to competing brands and is less sensitive to price , offers product
or service ideas to the company and cost less to serve than new customers because transactions
are routine. Some companies think that, getting a sense of customer satisfaction is by tallying
customer complaints, but 96% of unsatisfied customers do not complain but many just stop
buying.
2.6 Measuring Customer Lifetime Value
According to Lim (2005), Customer Lifetime Value is defined as the total value, in monetary
terms of average customers spanning the entire period that these customers are likely to do
business with the company.
The case of increasing the customer retention rate is captured in the concept of customer lifetime
value (CLV). Customer lifetime value (CLV) describes the present value of the stream of the
future profits expected over the customer’s lifetime purchases. The company subtract from the
expected revenues, the expected cost of attracting, selling and servicing the customer.
Carl Sewell (2005), in Customer for life, estimated that a customer entering his dealership for the
first time represents a potential lifetime value. If the customer is satisfied and buys several

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phones from the dealership over his or her buying lifetime and subtracting the cost of selling and
serving the customer the value will be normal but if the customer brings in other customers the
value will be higher
There are two ways to strengthen customer retention;
 To erect high switching barriers. Customers are less inclined to switch to another
supplier when this would involve high capital cost, high search cost, or the loss of loyal-
customer discounts.
 To create customer relationship management.
2.7 Customer Relationship Management (CRM).
Kotler, (2008), the aim of customer relationship management is to produce high customer equity.
Customer equity is the total of the discounted lifetime values of all the firm’s customers.
According to Susan Ward, (2009) Customer Relationship Management refers to the
methodologies and tools that help businesses manage customer relationship in an organized way.
For small businesses, customer relationship management includes;
 Customer Relationship management processes that help to identify and target their best
customers, generate quality sales leads, plan and implement marketing campaigns with
clear goals and objectives.
 Customer Relationship management processes that help from individualized relationships
with customers (to improve customer satisfaction) and provide the highest level of
customer service to the most profitable customers.

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 Customer Relationship management processes that provide employees with the
information they need to know their customers’ wants and needs, and build relationships
between the company and its customers.
Gartner (June 2009), describes a widely-implemented strategy for managing a company’s
interactions with customers, clients and sales prospects. It involves using technology to
organize, automate, and synchronize business processes that is principally sales activities, but
also those for marketing, customer service, and technical support. The overall goals are to
find, attract, and win new clients, nurture and retain those the company already has, entice
former clients back into the fold, and reduce the costs of marketing and client service.
Customer relationship management describes a company-wide business strategy including
customer-interface departments as well as other departments.
2.8 Forming Strong Customer Bonds
Berry and Parsuraman (2005) have identified three retention- building approaches;
 Adding Financial Benefits: Two financial benefits that companies can offer are
frequency programs and club marketing. Frequency marketing programs. Frequency
programs are designed to provide rewards to customers who buy frequently and in
substantial amounts. Frequency marketing is an acknowledgment of the fact that 20
percent of a company’s customers might account for 80 percent of its business. Many
companies have created club membership programs to bond customers closer to the
company and it is opened for all those who purchase a product or service.
 Adding Social Benefits: Company personnel work on increasing social bonds with
customers by individualizing and personalizing customer relationships.

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 Adding Structural Ties: The Company may supply customers with special equipment or
computer linkages that help customers manage orders, payroll and inventory.
Alan See, (2003) brought out eight steps to build strong customer bonds;
 Brand: The Company needs to start with a strong brand identity that customers
can identify with. The brand must not only communicate a message but also
inform, motivate and deliver as promised.
 Learning Relationships: Companies that implement learning relationships are able
to understand and anticipate a customer’s unique needs. Learning companies
understand that great customer experiences start with listening to the customer to
learn instead of talking to the customer to sell.
 Use Technology: To connect in positive and collaborative ways, technology also
enhances customer loyalty and delivers a faultless experience across channels and
touch points while demonstrating integrity and interest.
 Ensure and Empower: Ensure a high quality customer interaction that
demonstrates a caring attitude by empowering employees to resolve problems.
Loyalty cannot be built if the companies do not truly care for customers.
 Great service: every customer has a service support need. Use support incident as
an opportunity to solidify relationship in providing excellence and quick service
and solutions to build customer trust.
 One view of the company: despite the desires of cooperate managers, the
customer ultimately control the relationship. Great customer experiences start
when the company makes it easy for the customer to do business.

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 Layers: customers have layers and relationship layers are built on trust and
dialogue over time. Customer loyalty requires the care and commitment to take
time, invest the money, and have the patient to grow the relationship.
 Dynamic real-time processes: building relationships takes time; however instant
gratification has been a future of everyday lives for a long time. Give customers
rewards and keep promises on time.
2.9 Customer and Company Profitability
According to Kotler (2008), a customer profitability analysis is an evaluation process that
focuses on assigning costs and revenues to segment of the customer base instead of assigning
revenues and cost to the actual products, or the units or departments that compose the corporate
structure of the producer. Approaching profitably from this angle can sometimes provide
valuable insights into how each step of the process of designing, manufacturing and ultimately
selling a good or service incurs cost and generates revenue. Many businesses use a costumer
profitability analysis as a means of streamline process so they provide the highest degree of
efficiency and return, while generating the lowest decree of costar profitable customer is a
person, household, or company that over time yields a revenue stream that exceeds by an
acceptable, amount the company’s cost stream of attracting, selling, and servicing that customer.
According to Putten (2002), the best customers outspend others by ratio of 16 to 1 in retailing, 13
to 1 in the restaurant business, 12 to 1 in the airline business. Yet every company loses money on
some of its customers. It is not necessarily the company’s largest customers who yield the most
profit. The largest customers demand considerable service and receive the deepest discounts. The
smallest customers pay full price and receive minimal service but the cost of transacting with

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small customers reduce profitability. This fact explains why many large firms are now invading
the middle market.
Heinlein and Kaplan (2009), propose a six-step approach for dealing with unprofitable
customers, a framework they refer to as the ABCs of Unprofitable Customer Management;
Step 1: Avoid their acquisition in the first place
Step 2: Bear in mind potential rescue operations
Step 3: Catch the possibility of abandonment
Step 4: Draw up a cost that is benefit analysis
Step 5: Ensure familiarity with your environment
Step 6: Facilitate biting the bullet that is facing the situation.
According to Miller Robert, (2001), a company's customer can greatly affect profitability by
corporate resources consumed. Most organizations are unaware of which customers are
generating profits and why. As an organization develops a customer profitability analysis,
opportunities for improvement of customer services can be implemented and corresponding cost
reductions realized. Most companies are under the impression that their higher volume customers
are their most profitable customers.
A customer profitability study will indicate which customers are profitable and which ones are
unprofitable. This information will reveal where a company is profitable and vulnerable to
competition or unprofitable and vulnerable to shareholder dissatisfaction. The main objective of

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a customer profitability study is to assign the revenues, expenses, assets and liabilities of an
organization to the customers that cause them. The first step is to assign costs directly to
customers. It is preferable to avoid any allocations if the present accounting system can identify
the resources consumed by each customer. It is also important to assign assets and liabilities to
customers, such as average accounts receivable days and average creditor days.

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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Type of Research
This type of research is a descriptive type of research specifically survey. The purpose of the
descriptive research is to gather data and to evaluate how Vodafone Ghana retains its customers
and to help solve the problem retention.
3.2 Population
The target population for the study consisted of management of Vodafone Ghana (Airport
Branch) and Vodafone users in Oyibi community including students and lecturers of Valley
View University.
3.3 Sample and Sampling Technique
Sample size was 100 respondents including management and customers. 60 from Vodafone
management and 40 from Vodafone users. Convenience sampling was used to gather data from
respondents who were conveniently available to provide the necessary information.
3.4 Type of Data
Qualitative data was used which involves the use of percentages and frequencies for the
researcher’s interest on the findings. To identify customer needs in order to retain them in an
organization and gain insights into peoples’ attitudes towards a product or services.

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3.5 Source of Data
The source for this research was mainly primary source. The primary data gathered for this study
was received through self-designed questionnaire administered to the management of Vodafone
Ghana (Airport Branch) and Vodafone users in Oyibi.
3.6 Instrument for data collection
Instruments used to gather data was questionnaires. These questionnaires were divided into four
sections. Section one was the personal data of respondents, section two was drafted to identify
the strategies used by the organization. Section three which was to identity the extent to which
the retention strategies are used by the organization and the last section was objective three
which was to examine the challenges faced by the organization in retaining their customers.
Another questionnaire was designed to examine respondents’ perception of customer retention
strategies.
3.7 Procedure for Data Collection
The researcher visited the sample firm to collect the questionnaire administered to them; a one-
week notice was given to the researcher to come for the questionnaires. Out of the 60
questionnaires given 57 were completely filled, two were not answered and one was misplaced.
Accordingly, the researcher concentrated on those questionnaires that were correctly filled for
presentation, analysis and discussion of results.

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3.8 Method of Data Analysis
The researcher analyzed the data collected from the questionnaires using Microsoft Excel to
draw tables. Frequencies, percentages and ranking statistical methods were used to determine the
distribution of the respondents.

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CHAPTER 4
RESULTS AND DISCUSSION OF DATA
4.0 General Information of Sample Firm
Vodafone - Ghana is one of the latest additions to Vodafone Group Plc, the world's leading
mobile telecommunications company. It successfully acquired 70% shares in Ghana
Telecommunications Company (GT) for $900 million dollars by Vodafone International Plc on
July 23, 2008.
Vodafone Group Plc is making significant in-roads in Africa. Currently, it operates in Kenya,
South Africa, Tanzania and Mozambique. It also has a significant presence in Europe, the
Middle East, Asia Pacific and the United States through the company's subsidiary undertakings,
joint ventures, associated undertakings and investments.
Vodafone Group has more than 315 million customers, excluding paging customers, calculated
on a proportionate basis in accordance with its percentage interest in these ventures. Operational
in 31 countries, the company is ranked among the top 10 global companies by market
capitalization.
Vodafone has a unique portfolio of products and services. The company provides a high-speed
access to the internet, mobile services and fixed lines.
The company applies the latest industry technology and is keen on building the most versatile
network. They go the extra mile to ensure that services on mobile handset enables users to go out
and conduct their business or have fun in the most enjoyable and relaxing manner. They indeed
add value to customers’ lifestyle.

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They are the market leader in providing broadband services, which are among the most
competitive in the market.
The company has a deep sense of social responsibility. They do this through responsible
employee volunteerism, providing access to communication in deprived communities and
investing hundreds of thousands of cedis through the Vodafone Ghana Foundation in social
causes.
Excellent customer care is one of their strengths and they pride themselves in being the only
telecommunication company in Ghana with as many customer service points that is situated to
meet customers at their point of need.
Their promise to Ghana is to offer quality service on their network and ensure that customers
have value for their money.
4.1 Findings and Discussion of Data
Table 1: Respondents Distribution by Gender.
Source: fieldwork, 2011.
Respondents’ Profile
Out of the sixty (60) questionnaires that were distributed to respondents, only fifty-seven (57)
was retrieved. From these fifty-seven (57) respondents, twenty (20) female managers use
customer retention strategies representing 35.1% of the questionnaires that were retrieved.
Thirty-seven (37) male managers use customer retention strategies representing 64.9% of the
Gender
Frequency
Percent
Valid Percent
Female
20
35.1
35.1
Male
37
64.9
64.9
Total
57
100.0
100.0

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questionnaires that were retrieved. The table (table 1) above presents the statistics of the
findings.
Table 2 Age category of respondents.
Age
Frequency
Percent
Valid Percent
20-29years
27
47.4
47.4
30-39years
18
31.6
31.6
40-49years
12
21.1
21.0
Total
57
100.0
100.0
Source: fieldwork, 2011
Out of the fifty-seven (57) responses generated, twenty-seven ( 27) management respondents
belong to 20-29 years group representing 47.4%. Eighteen (18) of the managers answered 30-39
years of age representing 31.6% of the questionnaires that were retrieved. The remaining twelve
(12) of the respondents were managers who belong to 40-49 years category. They represent 21%
of the questionnaires that were retrieved for this research. Table2 represents the statistics of the
age distribution of management respondents.
Table 3: Respondents distribution based on department
n=57
Department
Frequency
Percent
Valid Percent
Marketing
25
43.9
43.9
HRM
17
29.8
29.8
IT
15
26.3
26.3
Source: fieldwork, 2011.

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Out of the sixty (60) questionnaires that were distributed to respondents, only fifty-seven
(57) were retrieved. From these fifty-seven (57) respondents, 25 respondents were from the
marketing department making 43.9%. 17 respondents were from the Human Resource
Management (HRM) department representing 29.8%. The remaining 15 were from the
Information Technology (IT) department representing 26.3%.
4.2 Data Analysis
The analysis of the data collected is done based on the objectives of this research. The first
objective therefore, was to identify the various retention strategies adopted by Vodafone
Company limited. Table 4 presents the findings.

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Table 4: To Identify the Retention Strategies Used by the Organization.
n=57
Source: fieldwork, 2011.
Table 4 describes the objective one that is to identify the customer retention strategies used by
the organization. From this table, 36.8% of the respondents strongly agree that building customer
relationship is the strategy that Vodafone as company uses to retain its customers. 26.3% agree
that building customer relationship is a strategy used; upon adding the percentages it means that
63.1% uses building customer relationship as a strategy to retain customers. 15.8% are undecided
Questions
Strongly
Agree
Agree
Undecided
Disagree
Strongly
Disagree
The
organization
retains its
customers by;
Frequency
Percentage
Frequency
Percentage
Frequency
Percentage
Frequency
percentage
Frequency
Percentage
building
customer
relationship
21
36.8
15
26.3
9
15.8
7
12.3
5
8.8
Product
Uniqueness
19 1
33.3
13
22.8
10
17.5
8
14.0
7
12.3
Branding
Strategies
10
17.5
23
40.4
7
12.3
11
19.3
6
10.5
Timely
Response to
customer
complaints
12
21.1
8
14.0
21
36.8
7
12.3
9
15.8
Providing
reliable
services to
customers
7
12.3
13
22.8
3
5.2
23
40.4
11
19.3
Providing
quality services
23
40.4
8
14.0
4
7.0
9
15.8
13
22.8

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in using customer relationship as a strategy. 12.3% of them disagree with this strategy.
Meanwhile, 8.8% strongly disagree on using building customer relationship as a strategy to
retain customers. For the purpose of this research, customer relationship as a retention strategy is
the love, appreciation and priority given to the needs of product users and the willingness to
serve them just the way want.
Again, further discoveries indicate that 33.3% of respondents also strongly agree with the fact
that product uniqueness is a strategy used. As far as they are concerned, customers will not care
much about how much they pay for a particular service but rather, what they gain out of such
payment or the value or the service purchased. They see this as the next best alternative after
good customer relationship, which can be used to retain customers. Other studies have confirmed
that customers are likely to switch to competitors’ products when there is high cost decline in
product quality and improvement in those of competitors. Nevertheless, this customer switch can
be prevented when there is a good company- customer relationship.
Also 22.8% agree on product uniqueness as a strategy. Moreover, 17.5% of these respondents are
undecided on this strategy. In other observations, 14% disagree on product uniqueness.12.3%
strongly disagree on product uniqueness. From the findings this implies, these set of respondents
do not see any feasibility in idea of using product uniqueness as a strategy in building customer
retention. This response could linked with the fact that, these respondents believe product quality
or uniqueness will rather increase the cost of production. However, this is a deviating fact from
the current trend of literature because according to the Art and Practice of the Learning
Organization 2001 (chap 7), satisfied customers pay less attention to competing brands and are
less sensitive to price , offer product or service ideas to the company and cost less to serve than
new customers because transactions are routine.

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Meanwhile, in the case of product branding, 17.5% of respondents strongly agree on branding
strategies. 40.4% of respondents agree that branding strategies help to retain their customers.
12.3% are undecided on branding strategies. 19.3% disagree on branding strategies. 10.5%
strongly disagree on branding strategies. 21.1% strongly agree that timely response to customer
compliant strategy used to retain its customers. 14% agrees on using timely response to customer
complaints as a strategy. 36.8% of respondents have undecided on the timely response to
customer complaints as a strategy to retain their customers. 12.3% disagree on the timely
responses to customer complaints. 15.8% strongly disagree on the strategy. 12.3% strongly agree
that providing reliable services to customers used to retain its customers. 22.8% agree on
providing reliable services. 5.2% are undecided on the strategy. 40.4% of respondents disagree
on providing reliable services to customers as a strategy to their customers. 19.3% strongly
disagree on providing reliable services to customers. Having 40.4% respondents disagreeing to
providing reliable service is rather strange. This is because Vodafone like other
telecommunication companies’ deals with services. That is it does not produce tangible goods.
Therefore, the quality of their services wills is determined by its reliability.
40.4% of respondents strongly agree on providing quality service to retain its customers. 14.0%
agree on providing quality service to customers and 7.0% are in doubt on the strategy. 15.8%
disagrees on providing quality service to customers. 22.8 strongly disagree on the strategy. This
is quite different from other findings because in this era of competition, customers show loyalty
to companies that can provide them value for their money.
According to Kotler (2008), customer retention can be defined as how companies or
organizations are able to maintain the existing customers’ base on establishing good relations
with all who buy the company’s product. Considering the customer retention strategies outlined

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the organization uses building customer relationship and providing quality services to retain their
customers most, while the rest of the strategies are somehow not frequently used, because they
believe that when funds are allocated to the other strategies, customers are not interested. The
least strategy that the organization uses is the timely response of customers’ complaints, but for
an organization to be able to retain its customer, it must always think of responding to customer
complaints on time.
Objective Two: To identify the extent to which the retention strategies are used the
organization.
After considering, which strategy the company admonishes most, it is of equal importance to
look at the consequence or influence of these retention strategies on the organization in terms of
its market share. Table 5 presents the finding on this objective.
Table 5: The Extent to Which the Strategies Are Used.
n=57
Questions
Very
Large
Extent
Lesser
Extent
Moderate
Extent
Small
Extent
No Extent
F
%
F
%
F
%
F
%
F
%
Sales
Volume for
the past year
24
42.1
14
24.6
7
12.3
11
19.3
1
1.7
Increased
market
Share
6
10.5
11
19.3
28
49.2
8
14.0
4
7.0
Demand
for
products
and
services
12
21.1
20
35.1
9
15.8
10
17.5
6
1.7
Positive
Corporate
Image
13
22.8
5
8.8
6
10.5
26
45.6
7
12.3
Source: field work, 2011.

27
Table 5 represents objective two which is to identify the extent to which the retention strategies
are used by the organization. With this, 42.1% of the respondents believe to a very large extent,
customer retention strategies have a great impact on the sales volume of the organization for the
past year. 24.6% of respondents say that there has been a low impact on the sales volume. 12.3%
believe there is a moderate impact on sales. 19.3% believe there is small impact on sales volume.
1.7% says no impact is made on the sales volume.
In terms of market share aquisitition, 10.5% say it has increased their market share to a very
large extent. Meanwhile, 19.3% believe it has increased their market share but to a low extent.
Again, 49.2% of respondents believe that there has been a moderate impact on customer
retention strategies. 14.0% of respondents say that the increase in their market share is to a small
extent. 7.0% say that their market share has not increased at all. This means that no significant
change has occurred with 21.1% respondents believe that to very large extent, customer retention
strategies has a great impact on the demand of products and services. 35.1% of respondents
believe that customer retention strategies have made a lower impact on their demand for product
and services for the past year.15.8% say demand for products and services have moderate
impact.17.5% believe that demand for products and services have a small impact. 1.7% of
respondents say demand for products and services have no impact. 22.8% believe that customer
retention strategies to a very large extent, has impacted on the positive corporate image. But
8.8% believe contrary. To them, it has rather had a lower impact on the corporate image of the
organization. 10.5% have a moderate impact.
However, 45.6% of respondents also believe that customer retention strategies have made a
small impact on the corporate image of the organization. This to some extent is in line with the

28
findings gathered by the Art and Practice of the Learning Organization 2001 (chap 7). According
to this finding most marketing theory and practice centers are on the art of attracting new
customers rather than on retaining and cultivating existing ones, the emphasis traditionally has
been on making sales rather than building relationships. A company would be wise to measure
customer satisfaction regularly because the key to customer retention is customer satisfaction. A
highly satisfied customer stays loyal longer, buys more as the company introduces new products
and upgrades existing products, talks favorably about the company and its product. Another
12.3% these respondents agree that there has been no impact.
Although an earlier studies by John Fleming and Jim Asplundh, (Feb.2009) indicates that
customer retention has a direct impact on profitability and due to this; the customer retention
strategies outlined in table 4 has made a great impact on their sales volume for the past year. The
strategies have also made a moderate impact on the market share. The demand for products and
services has made a lower impact because customers are not only interested in buying products
they like to be associated with companies which are customer-oriented so that they can
contribute ideas towards products or services. Positive corporate image is built when the brand
name of the company is been established in the minds of the customers but the corporate image
of the company has made a small impact. For the organization to gain its corporate image, they
have to build strong customer bonds by branding. Alan See, (2003), the company needs to start
with a strong brand identity that customers can identify with. The brand must not only
communicate a message but also inform, motivate and deliver as promised.

29
Table 6: Challenges Faced By the Organization.
n=57
Questions
Extremely
challenging
Somewhat
challenging
Not sure
challenging
Not challenging
at all
F
%
F
%
F
%
F
%
F
%
High
expectations of
customers
23
40.4
11
19.3
3
5.2
13
22.8
7
12.3
Customers’
loyalty
15
26.3
14
24.6
6
10.5
20
35.1
2
3.5
Competitors’
products and
services
9
15.8
25
43.8
16
28.1
4
7.0
3
5.3
Innovation of
products and
services
10
17.5
13
22.8
7
12.3
8
14.0
19
33.3
Customer
service
11
19.3
12
21.1
9
15.7
8
14.0
17
30.0
Source: fieldwork 2011.
Table 6 represents objective three which is to examine the challenges faced y the organization in
retaining customers, 40.4% of respondents based on the option given say high expectations of
customers is extremely challenging to their company. 19.3% say high expectation of customers
is somewhat challenging. 5.2% of respondents are not sure. 22.8% believe that high expectation
of customers is challenging. 12.3% of respondents say high expectations of customers is not
challenging at all. 26.3% respondents say customers’ loyalty is extremely challenging. 24.6%
respondents believe that customers’ loyalty is somewhat challenging. 10.5% are not sure of
customers’ loyalty. 35.1% of respondents say customers’ loyalty is very challenging. 3.5% say
customers’ loyalty is not challenging at all. 15.8% of respondents see competitors’ products and
services extremely challenging. 43.8% of respondents say competitors’ product and services are
somewhat challenging. 28.1% are not sure of competitors’ products and services. 7.0%
respondents see competitors’ products and services as challenging. 5.3% see competitors’
product and services not challenging at all. 17.5% believe that innovation of products and

30
services in extremely challenging 33.3% of respondents say innovation of products and services
is not challenging at all. 19.3% of respondents believe that customer service is extremely
challenging. 21.1% respondents say customer service is somewhat challenging. 15.7% are not
sure about customer service.14.0% say customer service is challenging. 30.0% of respondents
say customer service not challenging at all.
Susan Ward, (2009), customer service retention is a popular marketing strategy as it involves
focusing on meeting or exceeding clients' expectations in order to maintain their loyalty. When
people feel loyal to a certain brand or business, they are less likely to be persuaded by a
competitor's adverts and offers. The organization sees high expectations of customers as
extremely challenging because customers always expect something different from the
organization. Customers can only remain loyal to an organization when their expectations are
offered. The organization believes that customer service is not challenging at all but customers
say they are dissatisfied with how the organization retains customers through the service
rendered to them.
Table 7: Gender Distribution of Customer Respondents
Network used by customers
Gender
Female
Male
frequency
Percentage
frequency
Percentage
Tigo
7
58.3
5
41.7
MTN
6
46.2
7
53.8
Airtel
7
70.0
3
30.0
Vodafone
1
25.0
3
75.0
Source: fieldwork 2011

31
The table shows that 58.3% females’ use Tigo, 46.2% uses MTN, 70% of female respondents
use Airtel and 25.0% uses Vodafone. 41.7% males’ uses Tigo, 53.8% uses MTN, 30.0% uses
Airtel, 75% of male respondents use Vodafone than the other networks.
Table 8: Age of Customer Respondents
Age
Frequency
Percent
Valid Percent
20-29years
10
25.6
25.6
30-39years
16
41.1
41.1
40-49years
11
28.2
28.2
Above 60years
2
5.1
5.1
Total
39
100.0
100.0
Source: field work 2011.
The table represents a larger number of respondents constituting between the ages of 30-39
years, which represents 41.1% of telecommunication users. These respondents are identified as
the middle age users and the most suitable for acquiring adequate information. Between the ages
of 30-39 years, six (6 ) of them use MTN Network, four (4) use Tigo Network, two (2) use
Airtel and four (4) uses Vodafone respectively. The remaining respondents have age range
falling between 40-49years representing 28.2% in which two (2) use MTN, one ( 1) use Tigo,
one (1) use Airtel and seven (7) respondents use Vodafone respectively. Those within 20-29
years category represent 25.6% of the data in which four (4) respondents use MTN, two (2)use
Tigo, three (3) use Airtel and only one person uses Vodafone. From the table, those above 60
years constitute 5.1% of the total respondents. Out of this, one person (1) uses MTN and another
person also uses Vodafone respectively.

32
Table 9: Respondents Perception of Customer Retention
n=39
Questions
Very
Satisfied
Somewhat
Satisfied
Do not Know
Somewhat
dissatisfied
Very
dissatisfied
F
%
F
%
F
%
F
%
F
%
Customer
relationship
13
33.3
11
28.2
7
18.0
5
12.8
3
7.7
Network
reliability
7
18.0
5
12.8
11
28.2
10
25.6
6
15.4
Product or
service
uniqueness
5
12.8
15
38.5
9
23.1
7
18.0
2
5.1
Branding of
products
8
20.5
5
12.8
3
7.7
14
35.9
9
23.1
Response to
customer
complaints
4
10.3
8
20.5
6
15.4
5
12.8
16
41.0
Service
quality
9
23.1
7
18.0
5
12.8
2
5.1
15
38.5
General
customer
satisfaction
6
15.4
12
30.8
9
23.1
8
20.5
4
10.3
Source: field work, 2011.
The table shows how customers are satisfied with the retention strategies employed by the
organization. 33.3% of respondents are very satisfied with the customer relationship strategy.
28.2% respondents are somewhat satisfied with customer relationship. 18.0% respondents do not
know. 12.8% are somewhat dissatisfied with customer relationship. 7.7% are very dissatisfied.
18.0% are satisfied with the network reliability of their service providers. 12.8% are somewhat
satisfied. 28.2% of respondents are not sure of the network reliability strategy. 25.6%
respondents are somewhat satisfied with the network reliability. 15.4% are very dissatisfied with
the network reliability. 12.8% respondents are very satisfied with the product or service
uniqueness strategy. 38.5% of respondents are somewhat satisfied with the product or service

33
uniqueness strategy. 23.1% of respondents are not sure about the product uniqueness strategy.
18.0% are dissatisfied with the product or service uniqueness strategy. 5.1%respondents are very
dissatisfied. 20.5% of respondents are very satisfied with the branding of product strategies.
12.8% respondents are somewhat satisfied with the branding of product strategies. 7.7% are not
sure of branding of product strategies. 35.9% of respondents are somewhat dissatisfied with the
branding of products strategy. 23.1% respondents are very dissatisfied. 10.3% respondents are
very satisfied with the response of customer complaints. 20.5% are satisfied with the response to
customer complaints. 15.4% are not sure of the strategy. 12.8% of respondents are dissatisfied
with the strategy. 41.0% of respondents are very dissatisfied with the response to customer
complaints strategy. 23.1% of respondents are very satisfied with the service quality. 18.0%
respondents are satisfied with the service quality of the management. 12.8% are not sure about
the service quality strategy. 5.1% respondents are dissatisfied with the service quality of the
management. 38.5% of respondents are very satisfied with the service quality strategy. 15.4%
respondents are very satisfied with general customer satisfaction. 30.8% of respondents are
somewhat satisfied to the general customer satisfaction strategy. 23.1% respondents are not sure
of the general customer satisfaction strategy. 20.5% are dissatisfied with the general customer
satisfaction of the management. 10.3% respondents are very dissatisfied with the general
customer satisfaction.

34
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
The summary of this research is with the topic ‘Customer Retention Strategies in
Telecommunication Industry’. There is a growing concern about the way firms easily loose out
its valuable customers other competitors both internally and externally. Research has shown that
effects of defection rate in organizations are very high. It was therefore necessary to undertake
research to provide evidence of the magnitude of the problem on the operation of many affected
organizations to enable decision makers employ better retention strategies. In all Vodafone
Ghana was chosen as the case study for this research.
The objectives of the study were;
 To identify the customer retention strategies used by the organization.
 To examine respondents perception of customer retention strategies on the organization
 To identify the challenges faced by the organization in retaining customers.
Qualitative data was used for the study to identify customer needs in order to retain them in an
organization and gain insights into peoples’ attitudes towards product and services. This data
involves the use of percentages and frequencies and the researcher’s interest is on finding out the
customer strategies retention used by telecommunication industries.
The researcher analyzed the data collected from the questionnaires using Microsoft Excel to
draw tables. Frequencies, percentages and ranking statistical methods were used to determine the
distribution of the respondents, the positional importance of the answers that were provided and
to describe the respondents.

35
According to the findings, the organization retains its customers through building customer
relationship and providing quality service to customers. The study also showed that, customer
retention strategies has a great impact on the sales volume of the organization for the past year.
Most challenges faced by the organization in retaining their customers are high expectation of
customers, competitors’ products, services, and customers’ loyalty to the organization.
Customers were questioned to find out how satisfied they were with the retention strategies used
by the organization. The findings show that, customers are not satisfied with the response to
customer complaints and are not sure of the network reliability of their service providers. They
are satisfied with the quality of service rendered to them by their service providers.
CONCLUSION
The study gives an insight about the opportunity as well as the challenges of retaining customers.
It is noticed that companies cannot hold on to existing customers when the old strategies are
being used, therefore to be able to retain customers new retention strategies should be used. An
organizations’ total output greatly depends on existing customers.
RECOMMENDATION
 Management should address problems relating to poor network reliability in most area.
Example it is difficult to get a Vodafone network around Good news heading towards
Oyibi.
 Introduce customer satisfaction rating to measure the performance of customers towards
the use of the organization’s product and services.

36
 Develop a customer focus panels to identify customer needs and discuss views on
retaining customers.
 Management should monitor progress through face-face communication with customers
to know their problems and opinions.
 It also about exceeding their expectation so that customers will become loyal advocates
to the organization’s brand, because retention has a direct impact on the profitability of
the organization.
The researcher hope if these recommendations are put into practice the telecommunication
industry can operate without any difficulty in the near future.

37
REFERENCES
Berry L. A and Zeithaml Parsuraman (2005). Customer Satisfaction, New Jersey
Fleming John and Asplundh Jim, (2009). Managing the Employee-Customer Encounter,
Amazon.com.
Gartner (2009), Customer Relationship Management, IT News Africa.
Heinlein Michael and Kaplan Andreas (2009). The ABCs Approach to Unprofitable
Customer Management, Business Horizons, Vol.52.
Kotler Philip, Armstrong Gary, Wong Veronica, Saunders John (2008). Marketing
Management.
Lim Larry (2005).Customer Lifetime Value, Ezine Articles.
Lake Laura, (2008). Exploring the value of Customer Retention, About.com Guide.
Miller Robert, (2001) Customer Profitability Study. CMA Management.
Senge Peter, (2001), In the Art and Practice of the Learning Organization (chap 7).
Sewell Carl (2005). Customers for life, Amazone.com.
See Alan, (2003) Eight Steps to Build Strong Customer Bonds.
Ward Susan, (2009). Customer Relationship Management, About.com

38
APPENDIX
QUESTIONNAIRE (CUSTOMERS)
Dear Respondent,
I need your help to be able to complete this research work, titled Customer Retention
Strategies in Telecommunication Industries. Please note that this is purely for academic
purposes, and your responses will be treated with absolute confidentiality. Thank you for your
cooperation.
Section A
1. Gender
Male [ ] Female [ ]
2. Age
20-29 [ ] 30-39 [ ] 40-49 [ ] Above 60 [ ]
3. Nationality
Ghanaian [ ] Non- Ghanaian [ ]
Section B
4. What kinds of network do you most at times?
MTN [ ] Vodafone [ ] Airtel [ ] Tigo [ ] Expresso [ ] others please
specify…………………………..
5. How likely are you to continue using the current network for the next 3 months?
Definitely [ ] probably [ ] May/ May not [ ] Will not continue [ ]
Definitely will not [ ]
6. How likely are you to recommend your current network to a friend?
Definitely will recommend [ ] Probably will recommend [ ]
May/May not recommend [ ] Probably will not [ ] Definitely will not [ ]

39
7. How long have you been using your current network?
……………………………………………………………………………………………
8. Have you ever switched services?
Yes [ ] No [ ]
9. What do think of the overall quality of your current service?
Excellent [ ] Very Good [ ] Good [ ] Average [ ] Poor [ ]
Please use the following ratio scale to address the questions below.
5- Very satisfied 4- Somewhat satisfied 3- Do not know 2- Somewhat dissatisfied 1- Very
dissatisfied.
10. To what extent are you satisfied with the following; 5 4 3 2 1
a) Customer relationship [ ] [ ] [ ] [ ] [ ]
b) Network reliability [ ] [ ] [ ] [ ] [ ]
c) Product or service uniqueness [ ] [ ] [ ] [ ] [ ]
d) Branding of products [ ] [ ] [ ] [ ] [ ]
e) Response to complaints [ ] [ ] [ ] [ ] [ ]
f) Service quality [ ] [ ] [ ] [ ] [ ]
g) General customer satisfaction [ ] [ ] [ ] [ ] [ ]
11. Kindly rank your preference regarding the 5 (five) networks with 1- Most preferred 2-
Preferred 3- May prefer 4- Less preferred 5- Not preferred.
1 2 3 4 5
a) MTN [ ] [ ] [ ] [ ] [ ]
b) TIGO [ ] [ ] [ ] [ ] [ ]
c) VODAFONE [ ] [ ] [ ] [ ] [ ]
d) AIRTEL [ ] [ ] [ ] [ ] [ ]
e) EXPRESSO [ ] [ ] [ ] [ ] [ ]

40
QUESTIONNAIRE(MANAGEMENT)
SECTION A: PERSONAL INFORMATION
8. Gender
Male [ ] Female [ ]
9. Age
20-29 [ ] 30-39 [ ] 40-49 [ ] Above 60 [ ]
10. Department
Specify ………………………………………………………………………..
11. Level or Position held.
Specify ………………………………………………………………
SECTIONB
Please read the statements below carefully and indicate the extent to which you agree or disagree
using the following scale.
5 - Strongly Agree 4 – Agree 3 – Undecided 2 – Disagree 1 -Strongly Disagree
QUESTIONS
5
4
3
2
1
My organization retains its customers by:
Building customer relationships
Product Uniqueness
Branding strategies
Timely response to customer complaints
Providing reliable services to customers
Providing quality services
Others please specify …………………………………………………………………………….
SECTION C
Please use the following ranking scale to address the questions below.
5- Very large extent 4- Low extent 3- Moderate extent 2- Small extent 1- No extent.

41
12. To what extent do you believe that your company’s retention strategies have made an impact
on the following; 5 4 3 2 1
a) Sales volume for the past year. [ ] [ ] [ ] [ ] [ ]
b) Increased market share for the past year. [ ] [ ] [ ] [ ] [ ]
c) Demand of products and services for the past year [ ] [ ] [ ] [ ] [ ]
d) Positive corporate image for the past year. [ ] [ ] [ ] [ ] [ ]
Others please specify
…………………………………………………………………………………………………
SECTION D
Please use the following ranking scale to address the questions below.
5- Extremely challenging 4- Somewhat challenging 3- Not sure 2- Challenging 1- Not
challenging at all.
13. To what extent are the following a challenge to the company.
5 4 3 2 1
a) High expectations of customers. [ ] [ ] [ ] [ ] [ ]
b) Customers’ loyalty. [ ] [ ] [ ] [ ] [ ]
c) Competitors’ products and services. [ ] [ ] [ ] [ ] [ ]
d) Innovation of products and services [ ] [ ] [ ] [ ] [ ]
e) Customer service. [ ] [ ] [ ] [ ] [ ]
Others please specify
…………………………………………………………………………………………………