Customer retention, purchasing behavior and relationship substance in professional services

Customer retention is central to the development of business relationships. However, customer retention is specific to the context of each firm, and this is rarely recognized in models for customer retention. This paper studies how customer retention depends on the relationship substance may be of a more or less embedded kind, which is explored here in the form of relationship satisfaction and organizational change in the buying firm. The conceptual model is tested on a sample of business relationships in professional services. The results support the fundamental effect that relationship satisfaction improves customer retention. The article also finds that the purchase development of customers increases customer retention, in particular if the customer who purchases more is also satisfied. However,when the selling firm has achieved change in the customer firm, customer retention is reduced. Evidently, these customers consider that they are done with the seller and move the other seller, or reduce their purchases altogether. This can be mitigated if the seller uncovers new areas for business, or involves value adding partners. (C) 2000 Elsevier Science Inc. All rights reserved.