An Evaluation Of The Effectiveness Of Customer Retention Strategies In Enhancing Brand Loyalty. A Case Of Favco Harare

ABSTRACT

The research sought to assess the effectiveness of customer retention strategies in enhancing

brand loyalty at FAVCO. The first objective of this research study was to evaluate the

effectiveness of customer retention strategies in enhancing brand loyalty at FAVCO.

Secondly, it was to determine factors contributing to customer dissatisfaction at FAVCO and

lastly to establish benefits contributed by customer retention at FAVCO. The research made

an assumption that major factors contributing to brand loyalty were customer retention

strategies.

For the past 2 years, FAVCO has been facing the problem of corporate customers switching

some of their brand choices to competitors like Selby, Valley Fresh and Interfresh. This

forced the company to engage into expensive strategies which included price markdown and

new customer acquisition. The company in early 2012 invested in customer retention

strategies which included customer service, communication, total quality management and

complaint management to fight the challenge but the company failed to make corporate

customers loyal to the FAVCO brand. The researcher used case study research design and the

case studies used were both exploratory and descriptive case studies. Probability sampling

method (cluster sampling) and non-probability methods (convenient and judgemental) were

used.

The researcher used a sample of 28 respondents from corporate customers, management and

employees. Data collection was done through interviews with the Sales, FMCG and the

Quality control manager as well as questionnaires which were distributed to employees and

corporate customers. The research found out that customer retention strategies had strong

impact on brand loyalty but more attention was needed in improving them to effectively

retain customers and making them loyal to the FAVCO brand.

The major recommendations were that FAVCO should not only acquire new customers but

rather retain its existing key customers. Further to this, FAVCO should consider also internal

marketing, key account management and service recovery as other customer retention

strategies that enhance brand loyalty. Finally, FAVCO management was recommended to

practice cross departmental participation in planning and improving the retention process to

make sure that everyone in the organisation is involved in the customer retention process.