ABSTRACT
This research examined the impact of customer retention on business performance specifically in Fast Food Industry in Nigeria. The study adopted adopted a cross sectional survey design to sample the opinion of respondents. This method involved random selection of respondents who were administered with questionnaires. Relevant conceptual, theoretical and empirical literature was reviewed. The target population of the study comprised selected students from selected fast Food in Lagos State, Nigeria. The questionnaire administered was three hundred and ten (310) copies and three hundred copies (300) retrieved which constitute the sample size. The descriptive and analytical approach was adopted using Chi-square to test and analyze the hypotheses earlier stated. Findings revealed that there is a significant impact of customer retention on business performance specifically in Fast Food Industry in Nigeria. The finding of the study also reveals that high expectation of customers is one of the factors that affect the customer retention of Fast Food Industry in Nigeria. The findings of the study also reveal that there is a significant relationship between customer retention and business performance specifically in Fast Food Industry in Nigeria. The finding of the study also reveals that competitors’ products is one of the factors that affect the customer retention of Fast Food Industry in Nigeria. The findings of the study reveal that provision of good communication skills is one of the strategies adopted by Fast Food Industries to improved customer retention. It was therefore concluded that customer retention significantly have impact on the business performance of Fast Food Firms in Nigeria. It was recommended Fast Food managers should work towards value and price paid and the overall expectations of the customers. This will promote satisfaction to customers and increase more return customers.
CHAPTER ONE
INTORDUCTION
Today’s competitive environment maximizes customer retention probability so as to sustain the company’s protection against inroads competition. Customer retention is needed to achieve this goal. Ramakrishnan, (2015) defines customer retention as the marketing goal of preventing customers from going to the competitor. Customer retention is the way in which organizations focus their efforts on existing customers in an effort to continue doing business with them (Mostert, 2014). However, customer retention can also mean the number of customers who stay with the provider in the course of an established period, such as a year (Dawes, 2014).
According to Dominici and Guzzo (2010), success in the market can be achieved by implementing policies geared towards customer satisfaction and loyalty rather than attracting new customers. To foster customer satisfaction, loyalty, and profitability, the Fast food Industries should concentrate on exploring CR strategies that aim to find, collect and capture the right information, evaluate and pass it on to the organization (Goyal, 2014). While the business environment is continually becoming dynamic and informationdriven, more and more enterprises seek out management strategists to evaluate their performances. Performance can be measured based on a precise objective that is realistic and achievable (Bell, 2015). As such, the objectives that assist them in choosing the best strategies are necessary. Globally, the hotel industry has grownphenomenally in the last ten years, with an annual growth rate of 6% (WTO, 2016), thanks to an increase in the number of customer flows. This is besides significantly contributing to foreign exchange earnings, enhanced economic growth, and development of many countries (Ivanov & Webster, 2017).
Customer retention is a key factor in determining the success of businesses today. Fluss (2012) notes that competitors are always on the lookout to steal customers through better deals. Fluss has observed that annual customer attrition rates range from 7% in industries that have high exit barriers such as banking and insurance, to almost 40% in the mobile phone industry. It can, therefore, be concluded that customers in the cellular industry keep on switching network providers for better deals. Customer retention has a direct impact on long term customer lifetime value, which is a more profitable avenue for firms that seek to pursue growth and sustainability or those that seek to protect themselves from market shrinkage resulting from a contracting economy (Gee, 2016). Supporting this argument, Lombard (2014) notes that today the pressure on companies to retwain customers is fuelled by the market where customer acquisition is slow. Customer retention is important when loyalty is decreasing and sales cycles are aggravating the business environment. Under these circumstances, losing animportant customer to a competitor would impact significantly on the organisation’s survival and growth.
Rich (2012) argues that for an organization to be attractive to customers who switch to its products there is always a reason that influences the customer’s decision. Some researchers have argued that customer defection is indirectly seen in some organizations, as customers do not completely withdraw from their relationship with the organization but rather become inactive (Karamura, 2015). Practitioners and academics provide important devotion to customer retention practice as it is proven to improve firm’s survival (Villanueva and Hanssens, 2016). Yap and Kew (2016) had further explained that the improvement in firm’s performance is possible with employment of appropriate marketing strategies that could increase customers’ spending and subsequently firm’s sales volume. Customer retention is essentially defined as customer’s commitment towards firm and its offerings for a specific period of time through their repeat purchases and tendency in spreading positive word of mouth among their social circle (Jeng & Bailey, 2012). Repeat purchase intention is regarded as the customer’s decision about re-purchasing a chosen service from the same service provider, taking into consideration the customer’s present condition and other possible occurrences (Yap & Kew, 2016). Customer’s emotional attachment such as loyalty and commitment towards a service provider frequently influences repeat purchase intentions (Han et al. 2014). Studies found that satisfied customers with positive experience will repurchase which will in turn improve firm’s performance (Chiu, 2012). It implies that customers’ repeat purchase intention is indirectly influenced by services provided to customers, which will subsequently create favorable experiences for them (Park, Kim & Jeong, 2012).
It is certain that in Nigerian many organizations/Small and Medium Enterprises are facing numerous barriers and challenges, which inhibits them from expanding their businesses and surviving for long period of time and Fast Food industries is not excluded. Maybe this could attribute to problems like lack of skillful personnel, poor market access, insufficient finance, competition from foreign Small and Medium Enterprises and technological limitations has been ear marked as the deterrents of Small and Medium Enterprises (Haron et al. 2012).
Therefore, Small and Medium Enterprises require monetary support to reduce the impact these barriers might pose and subsequently improve their performance (Desi, 2013). Besides monetary support, customer retention is also found to improve Small and Medium Enterprises’ performance. The improvement in firm performance is implied particularly in their finances where by having greater number of retained customers, the firms could reduce cost otherwise spent in acquiring new customers (Ghavami and Olyaei, 2014; Steven, Dong & Dresner 2012). As such, it is vital for Small and Medium Enterprises to retain their existing customers, as minor changes in customer retention rate will multiply firm’s profitability and hence their performance. Despite the prospects of retention practice in ensuring firm’s survival, according to Nitzan and Libai (2013), there is lack of related literatures as the current focus is more on the acquisition of new customers instead of retaining existing customers. Thus, this study is expected to contribute towards the body of knowledge in filling this gap by exploring factors that can lead to survival of business performance and how some elements that can hinder their performance; i.e. the paper tends to look at impact of customer retention on business performance using Fast Food Industry in Lagos State, Nigeria.
1.2 Statement of the Problem
Though much effort has been made to market Nigeria as a destination of choice, the number of customers has been fluctuating especially for the coastal region (Jasinsken, 2016). These customers constitute of both new and return guests, majority of who are hosted in the hotels. Since return customers take the greatest proportion of arrivals to a destination, a factor that determines the hotels’ performance, it was unclear whether customer retention strategies were in place in classified hotels and whether they could influence exemplary hotel performance. Globally, many studies regarding customer retention strategies have been made (Jasinsken, 2016), (Syaqwalo, 2014), (Khan, 2013), (Deng, Yeh, & Sung, 2013), (Fazul, 2009), (Kishna & Yurt,2012). While Sim (2006), Jasinsken (2016) & Syaqwalo (2014) concentrated on the consequences of CR in various hotels in Europe and Asia, Fazul (2009) found out that attitudes and motivations influenced customer retention in Dubai hotels. On the other hand, Deng, et. Al. (2013) found that customer retention could increase the present net value in a firm.
Locally, Soita (2016) researched customer retention strategies used by internet service providers concerning hotel performance in Nigeria while Kimutai (2015) carried out a study on the factors influencing customer retention among hotels utilizing mobile telephone services in Nigeria. The majority of these studies were executed in Asia, Europe, and the United States of America. The studies conducted in Nigeria focused on banking, mobile telecommunications, and very few in the hospitality sector in the form of case studies thereby making generalization difficult. This study sought to assess the influence of customer retention strategies on Fast Food industry performance in Nigeria.
1.3 Objectives of the Study
The main objective of this study is to examine the impact of customer retention on business performance specifically in Fast Food Industry in Nigeria. Specific objectives of the study include;
1.4 Research Questions
The following questions were answered in this study;
1.5 Research Hypotheses
The following were hypothesized in the study;
Hypothesis One
H0: There is no significant impact of customer retention on business performance specifically in Fast Food Industry in Nigeria
H1: There is a significant impact of customer retention on business performance specifically in Fast Food Industry in Nigeria
Hypothesis Two
H0: There is no significant relationship between customer retention on business performance specifically in Fast Food Industry in Nigeria
H1: There is a significant relationship between customer retention on business performance specifically in Fast Food Industry in Nigeria
1.6 Significance of the Study
This study’s main objective was to provide the policymakers or the management within the Fast Food industry with relevant information to make logical and well-grounded facts to strategically position them in the competitive business environment. Entrepreneurs may equally review their customer retention strategies and gear them towards improvedvisitation rates, bed nights per visit, customer commendation, and competitive advantage.
The research intended to assist the National government and county government to address challenges of performance in Fast Food industry.
Fast Food Industry may embrace the study findings as a guideline to equip learners to become efficient future managers, supervisors, and workers in the Fast Food industry, by ensuring that they are enlightened with the customer requirements. Furthermore, it offers avenues for future research for academicians.
1.7 Scope of the Study
This study is limited to examine the impact of customer retention on business performance specifically in Fast Food Industry in Nigeria. This study will be limited to only employees in fast food industry in Lagos State, Nigeria.
1.8 Operational Definition of Terms
Customer Retention: Customer retention is a business’s ability to keep existing customers and continue to generate revenue from them.
Business Performance: Business performance is considered to be the company’s ability to profit from the resources and achieve its objectives.
Fast Food: Fast food is a type of mass-produced food designed for commercial resale, with a strong priority placed on speed of service.
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