Effects of customer retention strategies on organisational performance: the case of First National Bank Zambia.
Date
2025
Authors
Shawa, Nelson
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
As the competitive environment of the banking industry becomes increasingly fierce, it is important for industry players to nurture and keep customers loyal who will contribute to their long-term growth and profitability. Customer retention is critical for sustaining organisational existence and profitability. Both practitioners and scholars have discovered that it is much cheaper to retain existing customers than investing on the potential customers. A decent customer retention level is believed to be a significant contributor towards improvement in the overall performance of the firm. Given the importance of customers as an organization’s primary revenue generator, understanding how customer retention affects business performance is expected to provide constructive implications for both academics and practitioners. Furthermore, Customer retention is an important aspect of organisational performance as cost reduces in servicing existing customers. This study intended to investigate how customer retention practices affect organisational performance in the banking sector with a particular focus on First National Bank Zambia. The study specifically, examined how customer service quality, Effective Pricing and customer communication affects organisational performance in the Zambian banking industry. The respondents were FNB customers across the entire branch network. A quantitative research design was adopted for this study due to its ability to be objective and produce generalizable results. A sample size of 150 customers was selected for the study using a questionnaire from the base of customers who consented to be contacted by the bank for marketing communications, using a simple random sampling method. The response rate was 91% (136 out of 150). A linear regression model was then developed from the data analysis to ascertain the impact of customer retention
strategies on organisational performance. Findings of the study indicated that attributes of customer retention i.e., Effective pricing, customer service and customer communication individually and collectively had a positive and statistically significant effect organisational performance. The study recommends that Banks in Zambia should invest more in managing customer relationships as a way of retaining them and attracting them and also to implement robust customer value management programs to improve customer life time value. Customer retention will give them an advantage over their competitors and contribute to overall profitability.
Keywords: Organizational performance, Customer retention strategies, Customer Retention, Profitability, Communication, Financial sector, Effective pricing, customer service, customer communication, First National Bank
Description
Thesis of Master of Business Administration Finance.