As the customer is the backbone of any business, firms without the customers would not be able to sustain their performance (Le, et al., 2021). This is because such firms are believed to have no revenue, no profits and no market value. According to Weinstein, managing customer is one of the important agenda in which the concentration of the company move towards attracting new customers to preserving the existing ones. Customer retention is seen to have an obligation of the customer of carrying the business in regular terms (Weinstein, 2020). The failure is all out to foil attempts by the customers for switching the retailers and retaining them in indirect terms. Companies invest more in marketing efforts for retaining their current customers and building a long-term relationships with the customers. The research concentrate on understanding the impact of customer retention on the business performance in relation to Amazon, Singapore.
Amazon, Inc is a technology company that focuses on e-commerce, cloud computing and artificial intelligence. It becomes one of the valuable brands which was founded in the year 1994. The company delivers “Echo, Fire TV, Kindle and various other products to the customers (Madhani, 2021). Moreover, the services include “Amazon.com, Amazon Alexa, Amazon Prime video and other services (Samo, Ashraf and Shahid, 2018). The company focuses on attracting a large number of customers and retaining the existing ones through building customer trust. Furthermore, the company also organizes the loyalty program and leverages customer data. In the year 2018, the company concentrated more on measuring the customer lifetime value for providing an overview of the business picture and its financial viability (Tian, Tang and Alan, 2021).
Customer retention is not given much attention, nowadays companies concentrate on delivering differentiation, quality and varieties of products and services (Dang, Le and Pham, 2021). However, it is important for companies to understand that developing customer retention strategies is highly important because it influences the profits, market share and reduces the ability of companies to gain a competitive advantage. Amazon in Singapore uses the traditional customer retention practices and does not invest more in adopting new customer retention strategies. This is one of the reasons through which the profit of the company was reduced by 26% in the year 2019 (Othman, et al., 2021).
According to Castelo-Branco, et al., Traditionally Market Management relies highly on combining the marketing mix strategy for increasing the market share and at the same time increasing the new customers (Castelo-Branco, et al., 2020). In this approach, the homogenous segments are formulated related to the heterogeneous customers. Aggressive and promotion are not only tactics, nowadays due to the high level of competition, it is become highly important for retaining customers. Amazon in Singapore face problem-related to encouraging the customers to repeat purchase, moreover, the company also face the issue of high marketing costs (Tripathi, et al., 2021). Customer retention is important because it supports the company to provide solutions to the problem. For example, customer advice results in saving, retaining customers and allows the company to provide better services to the customers. Therefore, the focus of Amazon should be on building a relationship and involving the customers. Furthermore, Amazon follows the aspects of mutual exchange and promise fulfillment.
In the research, the motivation of selecting customer retention and business performance topic is because retaining the customer becomes one of the important agendas of the companies. While acquiring success in a highly competitive environment customer retention allows companies to get long-term success and be highly efficient in a dynamic environment. The customer retention rates are measured through attitudinal data which determines the customer emotions and psychological attachment. Through this research, information is gathered about how the well-valued company retains their customers and the manner through which these practices influence the performance of the company.
The aim of the research is “to understand the impact of customer retention on the overall performance of Amazon, Singapore”. The aim is achieved by concentrating on the following objectives:-
The scope of the research lies within Amazon in Singapore, the research only includes the customer retention theories and practices which Amazon adopts for retaining their customers. The research also describes the strategies which could be adopted for improving customer retention strategies. However, the limitations of the research include that the study is conducted by using the secondary method and the scope of the research is limited such as only focusing on customer retention of Amazon in Singapore. Furthermore, the research does not conduct comparative research which is important to acquire the actual application of customer retention on the business performance. There are differences in the customer retention strategies used by large companies and their impact can affect the performance of the firms in different terms. One of the limitations of research is only that the research does not concentrate on understanding the effect of particular customer retention strategy (loyalty program) on the success of Amazon.
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The above graph described that research is conducted in a series of steps, in the first step research is designed and a research proposal is prepared. Furthermore, the research is prepared by collecting and analyzing the data. In the final report, the overall findings and discussion are described, furthermore, conclusions, recommendations are also provided in the study.
A literature review is an academic writing which demonstrates the knowledge and provides a complete understanding of the specific topic (Pambudi, Widayanti and Edastama, 2021). The literature review is written by narrowing the topic and searching the literature related to the topic. In the research, articles are selected related to customer retention and business performance.
According to Pereez, et al., customer retention refers to the company’s ability for retaining the customers for a particular period of time (Pereez, et al., 2021). The high level of customer retention means the products and services of the customers tend to return and continue to buy. Customer retention is important for reducing the defect and raising the overall quality of the product. Customer retention raises customer lifetime value and at the same time boosts the overall company’s revenue. However, as compared with this Casidy, Wymer and O’Cass, revealed that Amazon uses customer relationship management, personalization tool and customer service and support software for retaining the customers. The customer retention increases up to 33% of the purchase and increase the capability of the company for gaining valuable feedback from the customers. Through the analysis, it is described that 97% of the customers believe they are loyal towards the company, this results in allowing the company to find the opportunities and increase sales (Casidy, Wymer and O’Cass, 2018). According to Nawaz, Motiwalla and Deokar, Amazon improves the customer retention strategies by offering surprises to the customers and setting expectations. Moreover, the company also builds customer trust through frequent communication and over-deliver the promises (Nawaz, Motiwalla and Deokar, 2018).
The above discussion described that more of the study results in revealing the information about the customer retention and business performance about Amazon. The authors also described the strategies which Amazon adopt for customer retention. However, not much information is revealed about Amazon Singapore, that’s why the present research is conducted for determining the effect of customer retention on the performance of Amazon Singapore. To fill this gap, the researcher select some valid and reliable literature about Amazon Singapore so that objective of conducting the research is accomplished.
According to AlQershi, Abas and Mokhtar, (2018) customer retention is the metrics that examine customer loyalty and it is the ability of the company for keeping the customers over time, see Fig.1. The author described that customer retention concentrate on identifying the loyal customer number and determining the repurchasing behavior of the customers towards the brand. Customer retention is one of the main aspects of the company which concentrates on managing the productive relationship with the customers and at the same time become the key instrument for the overall financial gains. However, as compared with this Khan, et al., (2021) described that the retained customer agrees to pay a higher price for the particular product and for retaining the customer company to provide discounts to the new customers. The customer retention strategy will be developed by creating the customer communities across brand and leveraging analytics for monitoring the customer journey. Furthermore, the strategy of measuring the lifetime value of customers and improving the customer experience by all the channels helps in retaining the loyal customers.
Fig.1: Customer Retention Strategy
Source: (AlQershi, Abas and Mokhtar, 2018)
The factors of customer retention which followed in Amazon Singapore are the product quality, customer satisfaction and trust. These factor influence the customer retention strategy and at the same time affects the performance of the company. However, the company faced the issue of lower customer satisfaction sore which was received in the year 2021. A large number of customers face difficulty for the company to build the segmentation strategy (Pambudi, Widayanti and Edastama, 2021). This problem is important to be resolved by using the expectancy-value theory. In this the behavior of the customer is motivated by acquiring the results or determining the consequences. The trust issue will overcome by using the Commitment-trust theory this results in building a better association with the new and existing customers.
The financial performance is the result of customer satisfaction, the efficiency of the internal business procedure, innovation and increasing satisfaction level of the employees. Customer satisfaction becomes one of the important elements for examining the financial and non-financial performance of the firm (Toledo and Leon, 2019) . As per Weinstein, business performance results in maintaining commercial effectiveness, by determining the company’s ability for implementing the optimal company with the purpose of delivering the better product and services for meeting the expectations of the customers. The business performance s managed through delivering valuable information to a large number of customers (Weinstein, 2020). The performance of Amazon is depend on skilled human resource and loyal customers. The below graph describes the global profit of Amazon. In the year 2019, the revenue of the company was $280.52B and $469.82B in 2021 (Statista, 2022).
Fig 2: Revenue of Amazon
Source: (Statista, 2022)
The factors of business performance which is important for Amazon to keep into consideration in Singapore are customer insight, competitor insight and peripheral vision. However, the problem which faced by Amazon in Singapore is due to changing the customers taste and preferences as well as high level of competition. This will resolved by using structural ties strategy and applying the SERVQUAL model. It helps in providing greater output, acquire more opportunities and at the same time raising the satisfaction level of the customers (Tian, Tang and Alan, 2021).
According to Samo, Ashraf and Shahid, (2018) Amazon in Singapore makes use of customer satisfaction model. It is majorly used as the key performance indicator which keep the track of the level through which the customer is satisfied with the products and services of the company. Amazon use this model for meeting the basic and unstated needs of the customers. Moreover, the company achieve the customer in delight terms which helps the company to build customer loyalty and reduce customer complaints. Amazon’s understands the psychological state which examines the overall expectations of the customers. The focus of the company is to examine customer retention on four levels such as meeting customer expectations, surpassing their expectations, delighting the customers and amazing their customers by providing offers and discounts.
Fig 3: Customer Satisfaction Model
Source: (Khan, et al., 2021)
However, as compared with this Castelo-Branco, et al., described that Amazon in Singapore makes use of relationship marketing theory for retaining a large number of customers. This Amazon in Singapore delivers better value to the customers and concentrates on strengthening the better relation which results in increased customer satisfaction. In the relationship marketing, Amazon make use of direct marketing, service marketing and business marketing. Furthermore, he company focus on marketing channels for acquiring the new customers by sales and advertising. Through the discussion, it is revealed that relationship marketing is important for generating customer retention.
Fig. 4. Relationship Marketing
Source: (Tian, Tang and Alan, 2021)
The author also described that Amazon in Singapore implements the customer feedback loop for understanding the customer feedback and sharing the information by collecting, examining and distributing the customer reviews through the surveys (Pondel, et al., 2021). Amazon concentrate on delivering better services to the customers by acquiring the feedback, concentrate on vision, adopting the quality initiatives and communication. The company also focuses on performance measure and delivering better product and services. Furthermore, the customer communication calendar is also implemented by the company by launching promotional offers and delivering the proactive customer service approach.
Fig. 5: Customer Service
Source: (Oh, et al., 2021)
According to Khan, et al., customer retention is important because it plays an important role in the overall success of the company. The customer retention strategy satisfied a large number of customers and retain the existing customers. Furthermore, it increases the ability of the company towards raising the return on investment and boosts the loyalty programs. Through the estimation, it is revealed that in the year 2021, by better customer relationships the prime members of the company increased by 65% (Khan, et al., 2021).
However, as compared with this Daradkeh, reveals that due to the high level of competition, the customer retention strategy is important and Amazon in Singapore invests more in developing an adequate strategy. This helps the company to become one of the popular e-commerce platforms in Singapore. The author revealed that Amazon becomes one of the fourth-visited consumer e-commerce websites in the city-state. Moreover, the company’s ranking in the first quarter is determined by the iPrice. Customer retention helps the company to build better goodwill in the external environment, this helps Amazon in Singapore to gain a competitive advantage (Daradkeh, 2021). Furthermore, customer retention helps the company to increase the number of customers and revenue in the long run. Through the estimation, it is revealed that in the year 2020, the company’s net sales are increased and become US$50 million and it is in rank 2 by increasing its market share. Furthermore, customer retention is directly related to the sales of the company such in 2020, the net sales of the company is raised by 5%-10% (Weinstein, 2020). The customer retention in Amazon is highly depend on the satisfaction level of the customers towards the products, quality and services of the company. The below described graph reveals the customer satisfaction index of the company. In the year 2021, the customer satisfaction score of the company is 78 out of 100 (Statista, 2022).
Fig 6: Customer satisfaction with Amazon
Source: (Statista, 2022)
The product varieties, delivery experience and customer support are the factors that are important to retain the customer and affect the overall performance of Amazon in Singapore. The company delivers more varieties of product and focuses on providing better delivery experience to the customers. However, the company face issue in addressing all the customer issues at initial time. This can be resolved by using the IDIC model. In this company can determine the customer needs, provide better value and meet the customer needs (Nawaz, Motiwalla and Deokar, 2018).
In the research, the theories and frameworks related to customer retention and business performance were described. The research describes the element related to the phenomenon for providing broad information about the subject matter. The systematic review method is adopted for giving different perspectives and opinions of the authors about customer retention and business performance. The systematic review refers to the evidence by clearly formulating the questions and providing a summary of the research question (Sa?lam and El Montaser, 2021). The systematic review is important for identification, evaluating and summarizing the overall findings related to the customer retention strategies and business performance. The information is gathered about the strategies and theories which is used for customer retention and the practices that could be used for improving the customer retention strategies (Oh, et al., 2021). In this method, the research question is the first step which is developed by acquiring the background information about customer retention, satisfaction and business performance. As it is the most important step for acquiring reliable and adequate information about the particular subject matter. The research is conducted by following the steps such as:-
In the research, the articles related to the customer retention and business performance of Amazon were selected. The articles which provide information about Amazon in Singapore are selected and all the articles published between the year 2015-2022 are selected in the research. Furthermore, the articles which reveal data about customer retention and satisfaction are included in the study. However, the exclusion criteria reveal that the articles which are published before 2015 are not included in research and articles which do not provide information about Amazon in Singapore are not included in the research. The articles which do not provide information about Amazon’s in Singapore performance are not included in the study. The importance of selecting reliable articles is important because it gives information about customer retention because it can help companies for acquiring new customers and retain the existing ones. The systematic review is important for providing clear and comprehensive data about the subject matter (Madhani, 2021). It is important for collecting all the existing evidence and answering the research question. The criteria are created in the present research for revealing the evidence and for identifying the inclusion and exclusion criteria of the study. This results in decreasing the biasness risk and at the same time reveals more adequate findings of the subject matter (Tian, Tang and Alan, 2021).
The search study reveals complete information about the adequate articles which are selected in the research. At the time of selecting the articles, there are some keywords which are used such as “Business performance, Amazon, Singapore, Customer retention and Customer satisfaction. The articles are selected through Google Scholar and EBSCO for providing complete information about customer retention and business performance. Furthermore, manual searching is also done in the Library for understanding more about Amazon Singapore.
Conclusion and Recommendations
Customer retention describes the company’s capability for retaining the large number of customers for the products and services. It is important for increasing the revenue and goodwill of the company in the external environment. The aim of the research is to understand the customer retention impact on Amazon’s performance in Singapore. The data is collected by taking the perception and opinions of authors about the subject matter. The findings revealed that customer retention helps the company to attract more loyal customers and applies customer satisfaction model for meeting the unstated needs. There is a direct impact of customer retention on Amazon’s performance in Singapore because it helps the company to gain a competitive advantage. However, the problem faced by the company in relation to reducing the services, reduction in the satisfaction score of the customers and does not increasing the revenue of the company in similar terms. The problems of the company will be reduced by applying the SERVQUAL model and IDIC model.
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