The Moderating Effect of Social Performance Management on Relationship Marketing and Customer Retention

The importance of relationship marketing in managing customer relationships is widely researched with evidence abound of its potential to improve customer retention. However, despite employing relationship marketing programs, microfinance institutions (MFIs) in Kenya face challenges in customer retention. While retaining customers requires relationship marketing programs, there is growing body of literature on stakeholder management which suggests that apart from these programs, the social orientation of the business matters. Social performance management (SPM) is a practice which aims to transform institutions into socially responsible and customer-oriented ones. But despite the existence of SPM standards, Kenyan MFIs seem to underrate their importance. Study investigates extent to which social performance management matters by establishing its moderating effect on the relationship marketing-customer retention association. Using descriptive cross-sectional design, data was collected from 48 managers and 492 customers of MFIs in Kenya employing structured questionnaires and analyzed by multiple regression. Findings reveal a statistically significant and strong moderating effect of social performance management on relationship marketing and customer retention. Study concludes that social performance management is a desirable practice for improving customer retention. Study limitations included use of a quantitative approach which constrained respondents’ free expression; variables were investigated in a business-to-customer setting but did not extend to include the business-to-business setting. Future studies could address these limitations. The study contributes to relationship marketing knowledge base by providing a modified theoretical framework showing the non-linear structure of the relationship marketing-customer retention association through introduction of social performance management as a moderating factor.

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