Creating Customer Value for Enhanced Customer Satisfaction and Retention

Customers are increasingly becoming sophisticated due to forces such as advancement in technology, changing social roles and globalization. As a result, customer churning is today a common reality that most companies have to deal with in order to satisfy and retain their customers. Creating customer value has emerged as one of the winning strategic tools that firms could use to gain competitive advantage in the contemporary marketing environment. This paper is an empirical study that presents a comprehensive analysis of the relationship between customer value, customer satisfaction and customer retention. Data was obtained through a survey involving clients of Commercial Banks in Kenya; the survey yielded a total of 385 responses. A self administered questionnaire was used for the customers’ survey while interviews were conducted for Management. Descriptive statistics and regression data analysis methods were employed utilizing SPSS software. The findings of the study revealed that customer value has a positive statistically significant relationship with both customer satisfaction and customer retention.

the customer from being a sceptical buyer to a loyal and retained customer. Consistently, Weinstein (2012) regards customer value as a trade-off between benefits received from offers such as convenience, quality, reliability and promptness versus the sacrifices the customer has to make which include money, stress, and time to obtain products and services.
Customer value management relies upon customer value assessment to gain an understanding of customer's requirements and what it takes in monetary value to fulfil the requirements. Understanding the buyer's value within a given offering, creating it for them, strategising how best it can be delivered and managing it over time, have for long been recognized as essential elements of every market oriented firm's core business strategy (Slater & Narver, 1998;Woodruff, 1997). Verhoef and Langerak (2000) argue that a better understanding of the customer perception of value should lead to changes in the way the customers are managed as every point of interaction with customer affects their perception of value and the company's ability to design and deliver superior value. It should be understood that Customers' perception of value differs between first time customers and loyal customers. Portolan (2015) in his study demonstrates that a consumer who consumes a product or a service for the first time has the highest perception of value as that which attracted them to the product or service. In the contrary, loyal customers are more inclined to perceive value as that which is superior in comparison to the competitors' offer. Customer value therefore becomes a competitive advantage creation tool, when it is shared within the organization and all those involved in its implementation get a common framework of implementing it (Woodruff, 2007). As such, monitoring and meeting customers' needs and wants must essentially become the major value driver for the organization (Mcfarlane, 2013). Roig et al. (2006) observe two important characteristics of customer value: First is that customer value is inherent to the use of the product; this differentiates it from organisational value. Second is that customer's perceived value, cannot be determined objectively by the seller; only the customer is able to perceive whether or not a product or a service offers them value. From a customer's perspective according to Rebentich (2016), Perceived value is a multidimensional construct composed of six dimensions, namely: functional value of the organization, functional value of the employees, functional value of the service, functional value price, emotional value; and social value. On the other hand, Setifonos and Dahigaard (2007) view customer value as existing in 3 modes: added value, received value and perceived value. According to them, perceived value is the customer's assessment of utility of the product against the cost of acquiring it. Graf and Mass (2008) on the other hand, argue that customer value can be viewed from two different approaches: Perceived Customer Value (PCV and Desired Customer Value (DCV). PCV is a result of specific perceived benefits from a product and sacrifices that the customer makes to acquire it while DCV is based on consumer needs and desires.
Customers tend to be maximizers of value within the bounds of: search, cost, limited knowledge, mobility and income. A customer chooses the product which he expects will deliver the maximum value with the sum of both tangible as well as intangible benefits and costs; they estimate which offer will deliver the most perceived value. Whether the offer lives up to the customers' expectations affects individual customer level, Deserbo (2001) demonstrated that customer value mediated by loyalty results in increased purchases, increased cross-buying and increased word of mouth referrals.
In their study on the different dimensions of value, Onaran et al. (2013) found emotional value to be the most influential dimension on customer satisfaction and social value to be the least influential. Further, the study demonstrated that the different dimensions of customer value affected customer satisfaction directly. Roostika et al. (2013) found customer value to be the highest contributor to customer satisfaction at Betta = 0.752 and that customer value had a positive effect on behavioural intentions. Ryals (2005) demonstrated that there was a performance improvement attributed to increased customer value while Auka (2016) established that the different dimensions of customer perceived value (monetary, emotional, customization and relational) related directly but diversely to customer loyalty.
Customer satisfaction generates customer retention and loyalty; this in turn causes the customer to increase their volume of business with the organisation. Consequently, the business becomes more closely acquainted with the evolution of the customers' needs and expectations, and hence generates an advantageous position to adapt to these needs (Roig et al., 2006). To retain customers, the company must offer products and services that are of high value than those of competition.
Based on the reviewed literature, the study hypothesises as follows: H0 1: Customer value in the banking sector has no statistically significant influence on customer satisfaction.
H0 2: Customer value in the banking sector has no statistically significant influence on customer retention.

Methodology
The current study employed both descriptive and explanatory research designs (Saunders et al., 2007;Cooper & Schindler, 2006). The study was based in Nairobi, Kenya targeting customers within Nairobi City Central Business District (CBD); a total of 385 responses were obtained. The study sample was obtained through multistage sampling utilizing both stratified and random sampling methods. These methods helped to ensure proportionate representation of all the three categories of banks (Large, Medium and Small) (Kothari & Garg, 2014). A five point likert scale was used to measure the constructs. Descriptive analysis was done to ascertain the extent to which banks attempted to create and develop value for their customers while regression analysis was used to determine the direction and the magnitude of the relationship between the independent variable(customer value and the dependent variables (customer retention and customer satisfaction).
As part of data cleaning, frequencies were run to help scan for any possible wrong entries; the data had only a few missing cases which could not affect the results and were therefore ignored. All constructs in the instrument exceeded Nunnaly's 1978 recommended Cronchbach Alpha threshold of 0.70 thus confirming reliability of the instrument. The study also ensured that all assumptions of linear regression had been met, i.e. absence of multicollinearity, absence of outliers, normality, linearity, and homogeneity. Normality test was done using Kolmorov-Smirnov and Shirpiro-Wilk Normality tests (Field, 2009); the results indicated that the variables were different from a normal distribution. To test the significance of the departure from normality, Q-Q plots were run and the results revealed that departure from normality was minimal. This meant that the data was approximately normally distributed and could therefore be used to run the regressions.

Reliability Test
The research instrument was subjected to reliability test and the results were as follows: .731 .744 The results in Table 1 show that all the constructs met the recommended Cronbach Alpha threshold of 0.7 confirming the reliability of the instrument.

Sample Characteristics
The sample composition was 56.7% male and 43.9% female; meaning that more men than women accessed the banking services despite the fact the total population for women in Kenya is higher than that of men. The sample was well educated with more than 82% reporting college/tertiary education.
On customer churning, 52% of the respondents indicated they had ever switched banks out of which 60% had switched at least twice.

Descriptive Results on Creating Customer Value
The study sought to establish whether commercial banks in Kenya made deliberate efforts to create and add value for their customers. Customer value was measured subjectively as perceived by the individual customers. Respondents were asked to rate their banks on the basis of five value creation aspects on a scale of 1 (strongly disagree) to 5 (strongly agree). The study findings were as shown in

Regression Analysis
To test hypothesis one, Customer value was regressed on customer satisfaction and was also regressed on customer retention. The results are summarized in Table 3.

Table 3. Regression Results for Customer Value on Customer Satisfaction
It was hypothesised that there is no statistically significant relationship between customer value and customer satisfaction. The model Y= β 0 +β 1 CV + ε was fitted to determine the relationship. The results in Table 3   satisfaction increases by about 0.542 units. With P value < 0.05, H0 1 was rejected and the study concluded that customer value and customer satisfaction are positively and significantly related.

Discussions
Given that today's customers have a variety of choices for their financial needs, banks in Kenya must become providers of value, and must do it differently from each other. Customer value enables banks to sustainably differentiate themselves, satisfy and retain their customers and increase their future possibilities of survival. As revealed by the results of the current study, there is a considerable positive relationship between customer value and both customer satisfaction and customer retention. The findings establish that both customer retention and customer satisfaction can be generated through commitment to providing customer value in a way that is superior to competition. This study concurs with Portolan (2015) that adding value to a product by managing components that make it specific and differentiatable, contributes to a higher level of competitive advantage thus increasing the chances of satisfying and retaining customers. The results also explain the growing importance of adding both tangible and intangible value components to services through aspects such quality, convenience, accessibility, embracing technology, fair interest rates timely communications and excellence in customer care.