Who is King: Customer or Employee? Effect of Customer vs. Employee Focus Strategies on Customer Retention by Selected Small Enterprises in Nakuru Central Business District, Kenya
Keywords:
Customer Focus, Customer Retention, Employee Focus, SMEsAbstract
Customer and employee focus strategies are critical impetus in attracting and retaining loyal customers to guarantee continuous and stable revenue flow. This study sought to establish the influence on customer retention when customer and employee focus strategies are compared. Competing Values model of organizational effectiveness is used as the main theoretical anchor to the study. Cross-Sectional survey (i.e. correlational research design) was adopted since it enables a researcher to study a phenomenon at one point in time and to establish the nature of relationships amongst study variables. The study population comprised of 189 SMEs. Stratified random sampling taking 30% in each stratum was used resulting in 57 SMEs within Nakuru Central Business District. Primary data was collected using structured questionnaires. Correlation and regression analyses were carried out to analyze data and to test hypotheses. Customer Retention Rate (CRR) was used as dependent variable. Findings reveal that although both employee and customer focus strategies significantly predict CRR, employee focus strategies are comparatively greater predictors of CRR than customer focus strategies. However, the combined effect of employee and customer focus strategies manifested greatest effect on CRR. The significance of employee focus in customer retention cannot, however, be overlooked. It is recommended that organizations should deliberately consider strategies that focus on employee empowerment and not over-emphasize “the customer is king” mantra. Consequently, a non-skewed and fair balance between customer and employee focus strategies is critical for customer retention.
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