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Pillars of customer retention: An empirical study on the influence of customer satisfaction, customer loyalty, customer profitability on customer retention

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Abstract

The aim of this study is to explore relationships among five factors: customer relationship management, customer satisfaction, customer loyalty, customer profitability, and customer retention. The sample of the study consists of 750 managers and employees of different restaurant in Riyadh, the capital city of Saudi Arabia. The questionnaire developed for the purpose of this study is distributed by hand to respondents. Out of 750 questionnaires distributed, 497 are returned with a high rate of response. The Analysis of Moment Structures (AMOS, Version 22) is used to analyze the collected data. The findings of the study revealed a significant influence of customer relationship management on customer satisfaction, a significant influence of customer satisfaction on both customer loyalty and customer profitability. Therefore, the data doesn’t support the hypothesis that customer loyalty mediates the relationship between customer satisfaction and customer profitability. On the other hand, there are significant relationships between customer satisfaction and customer profitability and between customer profitability and customer retention, while there is no significant relationship between customer satisfaction and customer retention.
1. INTRODUCTION
Organization are striving to retain
customers in order to be able to cope with
many challenges. Examples of these
challenges include the increased levels of
competition among organizations, the
advancements in information technology, the
PILLARS OF CUSTOMER RETENTION: AN EMPIRICAL STUDY
ON THE INFLUENCE OF CUSTOMER SATISFACTION,
CUSTOMER LOYALTY, CUSTOMER PROFITABILITY ON
CUSTOMER RETENTION
Bader Almohaimmeed*
Business Administration Department, College of Business & Economics (CBE),
Qassim University, KSA, Buraydah Saudi Arabia, Qassim Region, Buraydah, Almleda.
(Received 30 October 2017; accepted 09 November 2018)
Abstract
The aim of this study is to explore relationships among five factors: customer relationship
management, customer satisfaction, customer loyalty, customer profitability, and customer retention.
The sample of the study consists of 750 managers and employees of different restaurant in Riyadh,
the capital city of Saudi Arabia. The questionnaire developed for the purpose of this study is
distributed by hand to respondents. Out of 750 questionnaires distributed, 497 are returned with a
high rate of response. The Analysis of Moment Structures (AMOS, Version 22) is used to analyze the
collected data. The findings of the study revealed a significant influence of customer relationship
management on customer satisfaction, a significant influence of customer satisfaction on both
customer loyalty and customer profitability. Therefore, the data doesn’t support the hypothesis that
customer loyalty mediates the relationship between customer satisfaction and customer profitability.
On the other hand, there are significant relationships between customer satisfaction and customer
profitability and between customer profitability and customer retention, while there is no significant
relationship between customer satisfaction and customer retention.
Keywords: customer relationship management, customer satisfaction, customer loyalty, customer
profitability, customer retention.
*Corresponding author: badermeed@gmail.com
S e rb i an
Journal
o f
Management
Serbian Journal of Management 14 (2) (2019) 421 - 435
www.sjm06.com
DOI: 10.5937/sjm1415517
emergence of total quality initiative, the
evolution of network economy (Minna &
Aino, 2005), the need for product
customization (Ashraf et al., 2015), and
globalization (Kangu et al., 2017). One of the
most important variables reported by authors
which can be utilized as a solution to deal
with these challenges is customer
relationship management (CRM).
In fact, numerous authors cited different
advantages of using CRM. Examples of
these advantages include the enhancement of
customer loyalty, profitability and
satisfaction as well as organizational
performance (ElKordy, 2014). Navimipour
and Soltani (2016) indicate that the main aim
of CRM systems is to increase the effective
implementation of CRM processes, which in
turn affects the effectiveness of their
communications with customers. Alipour
and Mohammadi (2011) consider CRM as a
major competitive strategy which
organizations could use to enhance their
interactions with customers. Soliman (2011)
found that CRM is significantly, directly and
positively related to marketing performance.
In their study on CRM and performance in
the banking sector, Wachira and Were (2016)
come to a significant impact of CRM on
banks’ performance. Kangu et al. (2017)
figure out a positive impact of CRM on
customer loyalty.
CRM has been defined as a method used
by organizations to manage business
relationships with their customers. The
management of these relationships include
maintain prosperous long-term relationships
with loyal and profitable customers
(Navimipour & Soltani, 2016). According to
Ashraf et al. (2015), the concept of CRM is
implanted in the management of customers
relationships on the basis of the effective and
efficient flow of information, and the
achievement of increased value delivered to
the customers in addition to the reduced
costs of the organization. According to
Stojkovic and Dubricic (2012), CRM
philosophy refers to an iteration process of
four activities, which are knowledge
discovery, market planning, interaction with
customers and customer’s data analysis.
ElKordy (2014) adds that this process
comprises the integration of sub-process,
technology and customer orientation, which
aims at enhancing the organization capability
to effectively manage its profitable
interactions with customers. Piroozfar and
Yaghini (2012) conceptualize CRM based on
two views; the strategic view and the
technological view. According to them, the
strategic view of CRM elucidates the
evolution of CRM concept in terms of
transactional and relational marketing in
view of the fact that CRM is a final result of
these two types of marketing, and the
technological view of CRM, in which
organizations adopt new practices such as
data mining, data warehousing and best
practices of customer interactions in order to
deal with changes in business environment
as the increased competition and the need for
products customization. Kangal (2012) cited
a number of CRM definitions in which the
concept is considered as an approach steered
towards customers, either through the
emphasis on their lifecycles, as a relational
strategy, a market competition method, or as
a customer-driven technology.
To the best of the author knowledge, little
studies are conducted to investigate the
indirect effect of CRM on customer retention
through customer satisfaction, customer
loyalty, and customer profitability using a
sample of service organizations such as
restaurants. The main contribution of this
study can be recognized through finding the
422 B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
relationships between customer relationship
management and customer satisfaction,
customer satisfaction and customer loyalty,
customer satisfaction and customer
profitability, customer profitability and
customer retention, as well as customer
satisfaction and customer retention. On one
hand, customer relationship might results in
customer satisfaction, but customer
satisfaction only is not enough to ensure
customer loyalty Noor (2012), profitability
or retention.
Numerous organizations observe the
migration of some of their satisfied
customers to another competitor
organizations. One important factor
considered as critical antecedent to cope with
this case is customer loyalty. Even if an
organization gains its customers loyalty,
some of them accord nothing in terms of
profitability and it may become unable to
retain those loyal customers. In a word, for
an organization to achieve success, it should
be able to take possession of its own loyal
and profitable customers in order to be able
to retain them. In fact, this scenario is
emerged from numerous discussions
conducted by the researcher with different
managers and employees from different
organizations. This conclusion is consistent
with CRM theory which indicates that
organizations are required to retain loyal as
well as profitable customers (Kangu et al.,
2017).
In accordance with the contribution of this
study, it tries to explore the relationship
between customer relationship management
and customer satisfaction the relationship
between customer satisfaction and customer
profitability through customer loyalty and
the relationship between customer
satisfaction and customer retention through
customer profitability. Consequently, the
study seeks to investigate the mediation roles
played by customer loyalty and customer
profitability.
2. LITERATURE REVIEW AND
HYPOTHESES DEVELOPMENT
2.1. Customer relationship
management definition
A deep review of the literature in relations
to definitions of CRM results in many
definitions as can be seen in Table 1. It was
concluded that CRM represents a mean by
which an organization be in a position
enables it to create superior value for itself
and for its customers through building
lasting relationships with those loyal and
profitable customers.
2.2. Customer relationship
management dimensions
Different dimensions of CRM found in
the literature. Khodakarami and Chan (2014)
categorized customer relationship
management systems into three types:
collaborative systems, analytical systems,
and operational systems. Collaborative
systems are used to manage the
communication process between the
company and the customer, while analytical
systems are used to analysis customer data.
On the other hand, the operational systems
are used to enhance the efficiency of CRM
processes. Bahrami et al. (2012) argue that
CRM uses customers data and can be
facilitated by information technology
applications. i.e., E-CRM. In terms of
dimensions of CRM found in the literature,
Chen and Popovich (2003) identified three
indispensable dimensions of CRM, which
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B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
are technology, processes and people.
Kincaid (2003) cited in Piroozfar and
Yaghini (2012) emphasizes the use of
information, technology, processes and
people to implement CRM. ElKordy (2014)
adds two dimensions, which were the
organization of CRM activities and customer
orientation. Minna and Aino (2005) assign
three inescapable components of CRM from
the technological view: the collaborative
systems, the analytical systems, and the
operational systems. Boudiaf (2016) appends
two dimensions, which are key customer
focus and customer knowledge. Urbanskiene
et al. (2008) pinpoint four dimensions of
CRM, which were key customer focus, CRM
organization, knowledge management, and
technology-based CRM. Kangal (2012)
particularizes six dimensions of CRM:
customers, management, relations,
employees, processes, and technology.
Dumitrescu and Fuciu (2009) describe of
CRM aspects: front (direct relationships with
customers) and back office operations (daily
functions of the organization such billing and
processing), business relationships with
other organizations, CRM-related data
analysis such as number of customers and
profitability.
Hassan et al. (2015) identified three
components CRM: customer, relationship,
and management. Adalikwu (2012) study
CRM in terms of customer acquisition
(contact rate with customer, regular
assessment of customer profitability, and
customer persuasion), customer
enhancement (increased sales either by
customized offers, switching barriers, or
decreased cost of service), and customer
recovery (added value in 4Ps and customized
services). Based on the above-mentioned
literature, one can conclude that CRM
comprise: technology, employees, processes,
relationships, information, and customers.
2.3 Customer relationship
management and customer satisfaction
Many studies have been confirmed that
the implantation of CRM processes would
results in greater level of customer
satisfaction (Richards & Jones, 2009;
Adalikwu, 2012; Stojkovic & Dubricic,
2012; ElKordy, 2014; Khedkar, 2015; Singh
424 B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Table 1. Definitions of CRM
Author (s) CRM definition
Chen and Popovich (2003) A combination of three ingredients directed to efficient and effective building and maintaining
of relationships with customers
Stojkovic and Dubricic (2012) A cyclic process of knowledge discovery, market planning, interaction with customers and
customer’s data analysis.
Parvatiyar and Sheth (2001) cited
in Piroozfar and Yaghini (2012)
A strategy used to create a value for the organization and the customer on the basis of
organizational activities concern acquiring and retaining specific customers.
Khodakarami and Chan (2014) An information system utilized by the company in order to collect, store, analyze
customer data to gain an expansive view of customers.
ElKordy (2014)
The integration of CRM processes, technologies, and organization along with customer
orientation which enables the organization to manage its long-term profitable interactions with
its customers.
Ashraf et al. (2015)
An information technology system used to manage organizations’ external relationships, i.e.,
relationships with customers, and internal relationships, i.e., relationship among the
organizational functions, in order to provide the customers with the intended value.
Navimipour and Soltani (2016) An approach used by organizations to manage business relationships with their loyal and
profitable customers.
& Singh, 2016). In their study on the effect
of CRM on customer satisfaction in banking
sector, Hassan et al. (2015) found a positive
effect of CRM on customer satisfaction.
Consequently, the following hypothesis is
suggested:
H1: CRM has a significant influence on
customer satisfaction.
2.4. Customer satisfaction and
customer loyalty
Kangu et al. (2017) defined customer
loyalty in terms of their willingness to repeat
purchases, referred new customers and
loyalty programs. Using a sample of
managers who are responsible for
relationships with customers of 147 hotels in
Kenya, the researchers found a significant
relationship between IT-based CRM
applications and customer loyalty. The study
concluded that the technology infrastructure
as a main component of CRM engenders
customer loyalty. In fact, the direct
relationship between CRM and customer
loyalty is not one of the hypotheses
suggested by the current study. Instead of
that, this study explores the relationship
between customer satisfaction and customer
loyalty.
In this vein, Arokiasamy (2005)
investigated the impact of customer
satisfaction on customer loyalty and
intention to switch and points out a positive
impact of customer satisfaction on customer
loyalty, while there is no significant
relationship between customer satisfaction
and intention to switch. Hence, the study
regards customer satisfaction as a major
requirement for customer loyalty. The
positive relationship between customer
satisfaction and customer loyalty is cited in
many works (Bontis et al., 2007; Mohsan et
al., 2011; Hafeez & Muhammad, 2012).
Therefore, the following hypothesis is
postulated:
H2: customer satisfaction has a
significant influence on customer loyalty.
2.5. Customer loyalty and customer
profitability
According to ElKordy (2014), CRM
theory considers customer loyalty as one of
the most significant keys that organizations
could use to enhance their profitability, and
this may be due to the fact that loyalty is
concerned with creating superior value for
customers (Anderson & Jacobsen, 2000). In
relation to the importance of customer
loyalty in wining customer profitability,
Babatunde and Ajayi (2010) give emphasis
to the influence of customer loyalty on
customer profitability. Ibojo and Asabi
(2015) cited many studies that assure the
positive impact of customer satisfaction on
customer loyalty, which in turn improves the
profitability. Thompson (2005) justify
organizations efforts to gain customer
loyalty by numerous factors: increased
customer profitability, increased number of
customers, and increased quality of products
and services. In order to examine these
studies in Saudi settings, the following
hypothesis is supposed:
H3: customer loyalty has a significant
impact on customer profitability.
2.6. Customer satisfaction and
customer profitability
Studies conducted to explore the impact
of customer satisfaction on profitability
make clear that both variables are positively
associated. Coldwell (2001) illustrate that
satisfied customers are more profitable than
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B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
non-satisfied customers. Ibojo et al. (2013)
found a significant relationship between
customer satisfaction and profitability.
H3: customer satisfaction has a
significant impact on customer profitability.
2.7. Customer profitability and
customer retention
In its paper of marketing profitability,
Lenskold Group (2003) characterize
customer retention as a continuous flow of
customer profitability. For an organization to
maintain its profitability stream, it is called
upon the development of strategies that
better customer retention. Dubihlela and
Molise-Khosa (2014) use a sample of
managers of hotels to test the relationship
between e-CRM, customer loyalty, customer
retention, and customer profitability. Their
results accept the hypothesis that customer
profitability is significantly associated to
customer retention. Hence, the following
hypothesis is suggested:
H4: customer profitability has a
significant impact on customer retention.
2.8. Customer satisfaction and
customer retention
While customer satisfaction is measured
in terms of the fulfillment of the gap between
customer expectation and customer actual
experience, customer retention refers to the
continuity of relationships between the
organization and the customer (Ibojo &
Asabi, 2015). Bowen and Chen (2001)
underline the importance of customer
satisfaction in order to ensure customer
retention. Subsequently, the following
hypothesis is presumed:
H5: customer satisfaction has a
significant influence on customer retention.
3. METHODOLOGY OF THE STUDY
3.1. Study sample, data collection,
measurements and statistical techniques
This study uses a sample consisted of 750
managers and employees working at
different types of restaurants in the capital
city of Saudi Arabia, Riyadh. The data of the
study is collected by a questionnaire
developed based on previous studies and
structured using a five-point Likert scale.
CRM assessed using 12 items (Chen &
Popovich, 2003; Kincaid, 2003 cited in
Piroozfar & Yaghini, 2012; ElKordy, 2014;
Boudiaf, 2016; Minna & Aino, 2005;
Khodakarami & Chan, 2014), customer
satisfaction measured by 4 items (Singh &
Singh, 2016), customer loyalty evaluated by
6 items (Kangu et al., 2017), customer
profitability measured using 4 items
(Pezeshki at al., 2005), and finally, customer
retention estimated by 4 items (Wachira &
Were, 2016). Accordingly, the questionnaire
of the study consists of 30 items. The
questionnaire distributed by hand to
respondents and 497 questionnaires are
returned complete and usable for the purpose
of statistical analysis. The Analysis of
Moment Structures (AMOS, V.22) is used to
analyze the collected data.
3.2. Reliability and validity of the
questionnaire
Reliability is measured using the average
variance extracted coefficients and validity is
measured by discriminant validity. The
results in Table 2 show that the criteria in
request for reliability and validity tests are
met. The values of composite reliability
ranged from 0.924 to 0.940 with values of
AVE from 0.694 to 0.822 as well as the
426 B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
square root of AVE values, shown in bold
and the correlation coefficients between
variables below these values, indicate an
acceptable level of reliability and validity.
4. DATA ANALYSIS
4.1. Model fit summary
The results of the structural modeling
equation related to the fitness of the model
shown in Table 3 underline an acceptable
indices of model fitness. Based on these
results, there is an acceptable fit between the
hypothetical model and the sample data.
4.2. Estimates
The findings of regression weights for the
default model bring to light, as can be seen in
Table 4 and Figure 1, a significant influence
of customer relationship management
(CRM) on customer satisfaction (CS)
(estimate=1.264, S.E.=0.115, C.R.=10.979,
P<0.05), a significant influence of customer
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B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Table 2. Reliability and validity results
Variable COR AVE CRM CS CL P CR
CRM 0.939 0.771 0.878
CS 0.933 0.742 0.442 0.861
CL .924 0.694 0.137 0.201 0.833
P 0.940 0.801 0.288 0.268 0.103 0.894
CR 0.928 0.822 0.093 0.025 0.132 0.322 0.906
Reliability measurements: COR (composite reliability) and AVE (average variance extracted), validity measurements: the square
root of AVE and correlation coefficients.
Table 3. Model fit summary
Indices Criterion Value Result
CMIN/DF Less than 2-5 1.752 Accepted
GFI More than 0.90 0.974 Accepted
AGFI More than 0.90 0.922 Accepted
RMR Less than 0.1 0.041 Accepted
CFI More than 0.90 0.989 Accepted
TLI More than 0.90 0.978 Accepted
RMSEA Less than 0.08 0.06 Accepted
Note: CMIN/DF: the minimum discrepancy (Chi
-
square/degrees of freedom), GFI: Goodness of Fit Index,
TLI: The Tucker-Lewis coefficient, RMSEA: root mean square error of approximation.
Table 4. Estimates of the default model
Path Estimate S.E. C.R. P
CRM CS 1.264 0.115 10.979 ***
CS CL 0.626 0.137 4.580 ***
CL P 1.508 0.010 14.884 ***
P CR 1.134 0.032 7.603 ***
CS P 1.134 0.032 5.760 ***
P CR 0.412 0.003 13.90 ***
CS CR 0.029 0.014 2.046 0.41
*** The regression weight for the variable is significantly different from zero at 0.05 level.
satisfaction (CS) on customer loyalty (CL)
(estimate=0.626, S.E.=0.137, C.R.=4.580,
P<0.05), a significant influence of customer
loyalty (CL) on profitability (P)
(estimate=1.508, S.E.=0.010, C.R.=14.884,
P<0.05), and a significant influence of
profitability (P) on customer retention (CR)
(estimate=1.134, S.E.=0.032, C.R.=7.603,
P<0.05). On the part of CS and CR, the
results found a non-significant between these
variables (estimate=-0.029, S.E.=0.014,
C.R.=2.046, P=0.410).
5. DISCUSSION
The aims of this study are fourfold. First,
to investigate the influence of customer
relationship management on customer
satisfaction. Second, to explore the
mediating role of customer loyalty in the
relationship between customer satisfaction
and customer profitability. Finally, to assess
the mediating role of customer profitability
in the relationship between customer
satisfaction and customer retention. Using a
sample consists of 500 managers and
employees working at different types of
restaurants in the capital city of Saudi
Arabia, Riyadh. The results point out that
customer relationship management is
significantly related to customer satisfaction.
That is, hypothesis 1 is accepted.
The current data doesn’t support the
second hypothesis which assumes that
customer loyalty mediates the relationship
between customer satisfaction and
profitability since there is a significant
relationship between customer satisfaction
and customer loyalty, a significant
relationship between customer loyalty and
profitability, and a significant relationship
428 B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Figure 1. The structural equation model (SEM) 1
1 e: Error
between customer satisfaction and
profitability. That is to say, customer
satisfaction is significantly related to
customer profitability, either directly or
indirectly. The mediating role of customer
profitability in the relationship between
customer satisfaction and customer retention
as suggested in hypothesis fails to be
accepted, since there is a significant
relationship between customer satisfaction
and profitability, a significant relationship
between profitability and customer retention,
while there is no relationship between
customer satisfaction and customer
retention. Table 5. Explained the summary
of hypotheses testing results
The results of the current study show a
direct relationship between customer
relationship management and customer
satisfaction, a direct relationship customer
satisfaction and customer profitability, and
indirect relationship between customer
satisfaction and customer retention. On the
strength of these results, one can conclude
that organizations pay more attention to
customer relationship management in order
to ensure their customers satisfied. From
managers and employees of organizations
under study, organizations direct their efforts
to satisfy loyal and profitable customers. The
results found a positive linkage between
customer satisfaction and both customer
loyalty and customer profitability.
However, organizations do not consider
customer retention seriously in the absence
of their profitability. In other words,
organizations take three main considerations
into their account to guarantee their customer
retention: customer satisfaction, customer
loyalty and customer profitability. Singh and
Singh (2016) reported that the cost of
satisfying one customer is less seven times
than the cost required to attract a new
customer. Additionally, low percent of loyal
customers, i.e., 20 percent contributes a high
percent, e.g., 80 percent of organization’s
revenue.
In his work on the relationship between
customer relationship management and
marketing performance, Soliman (2011)
indicates that most of the CRM concepts,
i.e., process, strategy, philosophy,
technology, and ability are ground on the
establishment of profitable long-term
relationships with customers on the basis of
its ability to adopt in a continuous manner to
every customer in order to retain him or her.
In relation to customer loyalty, Minna and
Aino (2005) identified creating customer
loyalty as a major process of CRM. In the
same context, Soliman (2011) defined CRM
as an approach used to understand customers
behaviors in order to increase their loyalty.
Kangu et al. (2017) detects a positive
influence of CRM as measured by
technology infrastructure on customer
loyalty. Minna and Aino (2005) mention a
main theme of CRM philosophy which is to
build and maintain long-term relationships
with profitable customers.
All in all, Jha (2008 cited in Wachira and
Were, 2016) think of customer retention as
an ultimate outcome of CRM. Babatunde
and Ajayi (2010) find out that CRM is
positively affects customer profitability.
Noor (2012) views customer satisfaction and
loyalty as intangible components of e-CRM
performance, and regard customer retention
as a tangible aspect of e-CRM performance.
Richards and Jones (2009) list several
benefits of CRM based on the results of
previous studies; enhanced customer
satisfaction. In relation to the direct impact
of CRM on customer satisfaction, Singh and
Singh (2016) name enhanced customer
satisfaction as a main advantage of CRM.
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B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Richards and Jones (2009) state that the
enhanced customer satisfaction is one of the
most common benefits of CRM. Khedkar
(2015) found appositive and significant
effect of CRM on customer satisfaction
which in turn affects customer loyalty.
Despite the significant and direct impact of
customer satisfaction on customer loyalty as
this study find.
6. CONCLUSIONS
6.1. Recommendations
CRM results in satisfied customers, which
in turn indirectly affects customer retention.
The direct relationship is between customer
satisfaction and customer loyalty and
customer profitability. Therefore,
organizations are required to undertake
practices directed to attract profitable
customers and take into their consideration
how to retain those customers. Examples of
methods employed this goal is to create
loyalty programs, training programs
designed to equip the organizational staff
with knowledge and skills related to create
long-term profitable relationships with
customers.
Babatunde and Ajayi (2010), in their study
on CRM in banking sector recommend banks
to invest more in employee training in order to
ensure an effective and efficient use of CRM.
In agreement with Kangu et al. (2017), the
presents study hold the view that organizations
ought to adapt to technology advancements in
order to increase their customers loyalty.
6.2. Limitations and future research
Despite the importance of the results
found by the current study, it still limited to
the sample of the study which consists of
managers and employees of restaurants only.
Researchers are called to use the same
constructs in different organizations from
different sizes. Another limitation of the
study relates to the model of the study, where
the direct or indirect relationships between
customer relationship management on one
side and customer loyalty, customer
profitability, and customer retention on the
other side. It is recommended to explore the
relationship between these variables in the
future. For example, further studies are
needed to investigate the relationship
between CRM and customer loyalty, either
directly or indirectly through customer
satisfaction. The generalization of the results
should be carefully applied, since the study is
kept within bounds of restaurants in the
capital city, Riyadh. Moreover, the study
measured customer satisfaction from
managers and employees viewpoints.
Future study should measure customer
satisfaction from customers’ perspectives.
Based on Garrido-Moreno et al.’s (2014)
results, two variables are necessary to ensure
the success of CRM, which are
organizational commitment and knowledge
management. Figure 2 shows a suggested
model that researchers should consider in
their future studies.
430 B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Table 5. Summary of hypotheses testing results
Hypothesis Result
H1 Customer relationship management is significantly related to customer satisfaction Supported
H2 Customer loyalty mediates the relationship between customer satisfaction and customer profitability Rejected
H3 Customer profitability mediates the relationship between customer satisfaction and customer retention Supported
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B. Almohaimmeed / SJM 14 (2) (2019) 421 - 435
Figure 2. Suggested model for future research
СТУБОВИ ЗАДРЖАВАЊА ПОТРОШАЧА: ЕМПИРИЈСКА
СТУДИЈА О УТИЦАЈУ ЗАДОВОЉСТВА, ЛОЈАЛНОСТИ И
ПРОФИТАБИЛНОСТИ ПОТРОШАЧА НА ЊИХОВО
ЗАДРЖАВАЊЕ
Bader Almohaimmeed
Извод
Циљ ове студије је истражити односе између пет фактора: управљање односима са
потрошачима, задовољство потрошача, лојалност потрошача, профитабилност и задржавање
потрошача. Узорак студије чини 750 менаџера и запослених у различитим ресторанима у
Ријаду, главном граду Саудијске Арабије. Упитник састављен за потребе ове студије ручно се
делио испитаницима. Од 750 подељених упитника, 497 је враћено се исправним одговорима,
што чини високу стопу добијених одговора. Анализа тренутних структура (АМОС, верзија 22)
коришћена је за анализу прикупљених података. Резултати ове студије открили значај утицаја
управљања односима са потрошачима на задовољство потрошача, као и значајан утицај
задовољства потрошача на лојалност и на профитабилност потрошача. Стога, подаци не
подржавају хипотезу да лојалност потрошача посредује у односу између задовољства и
профитабилности потрошача. Са друге стране, постоје значајни односи између задовољства и
профитабилности потрошача и између профитабилности и задржавања потрошача, док не
постоји значајна веза између задовољства и задржавања потрошача.
Кључне речи: управљање односима са потрошачима, задовољство потрошача, лојалност
потрошача, профитабилност потрошача, задржавање потрошача.
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APPENDIX
Questionnaire (Likert scale five point)
CRM
1. I feel CRM strategies is mainly concerned with the consumers interests.
2. I feel secured & satisfied with CRM strategies of the retail outlet.
3. Business is better with CRM rather than without.
4. I think time has come to make use of CRM extensively in retail
5. CRM leads to improve the customer base in retail.
6. I am feeling safe in the transaction
7. This restaurant presents the innovative services
8. This restaurant contacts with me and informs me about new campaigns and services
9. The personnel of this restaurant are sincere, helpful and kind.
10. The personnel of this restaurant understand my demands quickly and fulfil them immediately.
11. The personnel of this restaurant use an easy-to-understand language while giving service.
12. At this restaurant, all the news regarding the customer is collected regularly.
Customer satisfaction
1. I am satisfied with the performance of the employees
2. I am satisfied with the overall services range offered by the retailer.
3. I am satisfied with the overall service quality offered by the retailer.
4. The products and services offered by this restaurant meet my needs.
Customer loyalty
1. I intend to continue using services from this retail outlet for a long time
2. I am willing to say positive things about this retail outlet to other people.
3. I recommend to my friends and colleagues to visit & purchase through the same retail outlet as I do
4. This restaurant has a positive image
5. I will go on using the same restaurant
6. This restaurant is a leading restaurant in the industry
Customer profitability
1. Good value for the price paid
2. The cost is very acceptable
3. Supposing I were in the area again, I would go to this restaurant.
4.
I received the service in shortly time
Customer retention
1. I plan to continue my relationship with this restaurant in future.
2. I would encourage friends and relatives to go to this restaurant.
3. I have said positive things about my restaurant to others.
4. I consider my restaurant as my first choice.
... It measures the interactions between customer satisfaction on tourist purchase intentions, tourist loyalty, and company profitability on one side hand. On the other side, the effect tourist loyalty on tourist purchase intentions and firm profitability in related studies (i.e., Almohaimmeed, 2019;Kadhim et al., 2016;Al Muala & Al Qurneh, 2012;Othman et al., 2019;Quang, 2017). According to Othman et al. (2019) customer loyalty plays vital role in hospitality and tourism sector. ...
... It is worth noting that this study adopts and integrates partially the research models developed in ease studies (Almohaimmeed, 2019;Kadhim et al., 2016;Al Muala & Al Qurneh, 2012;Othman et al., 2019;Quang, 2017) to investigate the influence of services marketing mix on tourist satisfaction directly and customer loyalty indirectly. On one hand, it measures the interactions between customer satisfaction and consumer purchase intentions, customer loyalty, and profitability. ...
... However, also to inform their friends and family about this positive relation (Quang, 2017). In addition, previous studies (Almohaimmeed, 2019;Nuseir & Madanat, 2015;Othman et al., 2019;Sudari et al., 2019;Wongsawat & Deebhijarn, 2019) found that there is a significant positive relationship between tourist satisfaction and loyalty. Similarly, Wongsawat and Deebhijarn (2019) found that there is a significant positive relationship between customer satisfaction and loyalty. ...
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Services marketing mix (7Ps) has a significant role in promoting customer's satisfaction and loyalty. The present study, using structural equation modeling WarpPLS version (7) is used, aims at investigating the influences of (7Ps) on tourist's loyalty. In addition, it measures the mediator effect of tourist's satisfaction, consumer purchase intentions, and company profitability. Findings revealed that all dimensions have positively affected tourist's satisfaction directly, and tourist's loyalty indirectly. Consumer purchase intentions and company profitability are partial mediators between tourist's satisfaction and tourist's loyalty. The present study provides a deep understanding of services marketing mix strategies that stay needed for keeping a long-term link between managers of travel services and tourists. Several implications for travel agencies managers were suggested to achieve customer loyalty and consequently guarantee their company profitability.
... Customer satisfaction significantly influences customer loyalty (Almohaimmeed, 2019) and satisfied customers definitely become loyal (Izogo & Ogba, 2015). Customer satisfaction reports the highest impact among the factors affecting loyalty in the context of the retail banking industry (Omoregie et al., 2019). ...
... The examination of the relationship between customer satisfaction and customer loyalty has drawn a higher interest in the marketing context (Almohaimmeed, 2019;Cobelli & Chiarini, 2020). Meanwhile, Jere and Mukupa (2018) identify that customer satisfaction has the highest impact on customer loyalty among loyalty drivers in the mobile telecommunications industry in Zambia. ...
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... Customer retention has consistently proven to serve as a key concept for any organisation's long-term success as it ensures various beneficial outcomes (profitability, reduced costs, premium pricing and positive word-of-mouth endorsement) (Lovelock & Wirtz, 2018;Zeithaml et al., 2018;Almohaimmeed, 2019). The importance of retaining customers is even more prevalent in today's competitive marketplace, as customers are increasingly exposed to diverse attractive alternatives (Chen & Liu, 2019). ...
... Hanaysha (2018) define retention as the continuation of a business relationship between a customer and an organisation. The continuity of these relationships will generally provide organisations with a variety of benefits which comprises of economic benefits (greater profit margins, improved return on investment, repeat purchases, reduced costs and premium pricing), customer behaviour benefits (free advertising, customer voluntary performance and social benefits) and human resource benefits (customer involvement in the service delivery process, developing bonds between customers and employees and relational competitive advantages) (Lovelock & Wirtz, 2018;Zeithaml et al., 2018;Almohaimmeed, 2019). ...
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... Therefore, customer service is a positive thing to increase company revenue (Karya, Suhartono, Candra, 2017). So, it is essential for a company to pay special attention to customer satisfaction because it will generate a stable income for the company (Idrees & Xinping, 2017;Almohaimmeed, 2019). ...
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This study looked into how customer empowerment affects a company's performance (i.e., a bank). The relationship between customer empowerment and the firm's performance of banks in India's Delhi and NCR region has been studied, and innovation and customer satisfaction have been found to mediate this relationship. 439 bank employees, both male and female, were chosen for this study. Confirmatory factor analysis was used to analyze the data, and it was discovered that the variables met the requirements of path analysis. Customer empowerment has been found to have a significant impact on firm performance (i.e., a bank) as well as a negligible impact on customer satisfaction and customer retention. Therefore, this research differs from earlier studies that demonstrate that customer empowerment has a significant impact. It suggests a comprehensive framework that explains the connections between customer empowerment, innovation, customer satisfaction, customer retention, and business performance.
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