Managing Customer Retention and Loyalty: The Mediating Role of Customer Satisfaction

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University of Ghana


Customer relationship management has assumed critical importance, particularly in financial service marketing. Customers are increasingly becoming critical, demanding and less forgiving of firms. How to make customers become emotionally and psychologically attached to organizations have therefore become complex and complicated. Issues of customer loyalty, retention and satisfaction have risen to the top in both marketing research and practice. This has given rise to reconceptualization of the relationships between loyalty, retention and satisfaction. Much of previous research indicated that customer loyalty leads to retention. However, emerging theoretical arguments suggest that customer retention constitutes the starting point of loyalty, but there are limited empirical studies examining this claim. The current study therefore looks at how the mediating role of customer service affects the relationship between customer retention and customer loyalty. Data was gathered using cross-sectional survey, involving a sample size of 325 clients of National Investment Bank (NIB) in Accra, Ghana. The data gathered was analyzed using Partial Least Square Structural Equation Modelling (PLS_SEM). Findings from this study showed that customer retention positively predicted loyalty among the customers. It was also established that customer satisfaction partially mediated the effect of retention on loyalty. Taking together, these findings suggest that that getting customers to stay with an organization can lead to loyalty, but the effect can be quicker and stronger if the customers feel a sense of satisfaction. The practical, policy and theoretical essence of the findings are discussed within the context of building strong customer base of an organization.


MPhil. Marketing


Customer relationship management, Retention, Loyalty