Customer Relationship Management Strategies and Retention among Commercial Banks in Nakuru Town, Kenya

Abstract

Banks can attract customers on a daily basis. However, they have not been able to retain most of their customers as noted by the high numbers of reduced customers. This study sought to assess the customer relationship strategies applied by commercial banks in Nakuru Town and their impact on customer retention. The objectives of the study were: to assess the electronic banking, personalized selling, media advertisements and social customer relations on their effectiveness in customer retention. The target population for the study was 66 customer relationship officers and managers from commercial banks in Nakuru Town. A census strategy was adapted for the study where survey research design was used. Data for the study was collected by administering questionnaires to the selected relationship managers and officers. The data was then analyzed using descriptive statistics such as frequency counts, percentages, means and standard deviation. Further, Pearson correlation analysis was done between customer relation strategies and customer retention. The study revealed a statistically significant correlation between the level of use of electronic banking and customer retention in commercial banks in Nakuru Town; personalized selling strategy was also found to have a statistically significant correlation with customer retention. However, correlation analysis did not reveal any statistically significant relationship between the media advertisement, social media relations and customer retention which could be explained by choice of media about the audience involved. The study, therefore, recommended that owing to the impact of electronic banking on the performance of commercial banks, it was important that banks enhance their investment in more innovative customer service technologies. There was also need for commercial banks to focus on improving adoption of internet banking, and personalized selling which is more convenient and cost-effective as it involves no other intermediaries such as mobile banking. The mode of media advertisement and social media to be adopted need to be re-assessed and reevaluated to determine the most effective medium to be used. It is hoped that the study will give meaningful insight on different customer relationship strategies to enhance their retention.