Customer Retention Structural Model of Direct Selling Employees

Abstract

Customer orientation of service employees is seen as important success factor for gaining customer retention in Gano Excel, a direct selling company in Malaysia. The objective of this study is to understand how customer orientation (CO) of service employee (SE) can affect the commitment (COM) and customer retention (CR). A structural model of all the variables was developed for the study. Each variable is measured using 7-point interval scale which is grouped into 3 exogenous latent variables: technical skills (3 items), social skills (3 items), and decision making authority (3 items); and two endogenous latent variables: commitment (3 items) and customer retention (3 items). The responses collected were 119 completed questionnaires whereby, 2 respondents were deleted due to outliers problem (D 2 ). The data was analyzed using Structural Equation Modeling (SEM) through AMOS7. Confirmatory factor analysis of measurement models indicates adequate goodness of fit when 1 item was eliminated through modification indices verifications. Goodness of fit for the revised structural model shows adequate fit a(GFI=0.918, P-VALUE=0.359, RMSEA=0.021 and ratio (cmin/df) =1.053). This study has established four direct significant and positive causal effects: (1) technical skill and commitment; (2) social skill and commitment; (3) technical skill and customer retention and (4) commitment and customer retention. The findings are discussed in details.