Customer Retention Through Prioritization: Integrating Time-Dependent Context of Relationship Dynamics

Abstract

ABSTRACT Most marketing researchers and practitioners emphasize sustaining strong customer relationships for improving profitability. Profitably managing customer relationships is, therefore, an important foundational cornerstone of marketing. In contrast, the role of effectively prioritizing customers for increasing profitability has been challenged in marketing literature. While there are divergent views on the principle of customer prioritization, the role of differential use of marketing instruments in managing relationship marketing investments to effectively retain customers is yet to be substantiated. The current study proposes a conceptual framework explicating the key role of customer prioritization in accounting for the effectiveness of relationship investments and interaction frequency. The effect of customer prioritization on customer retention is contingent upon the length of the relationship. We test the proposed framework with a multimethod approach to help ascertain the value of customer prioritization in enabling firms to effectively use relationship investments for customer retention. The findings also establish the moderating role of the relationship phase on customer retention over the length of the relationship.