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Retaining customers involves devising marketing strategies which are customer-centric. Hence, there is a drastic shift from product-centric approach to a customer-centric approach which implies making customers a part of the organization (Kandell, 2000). More thrust on personal interactions and relationship building strategies would require greater participation from customer side (O’Malley & Tynan, 2000). Berry (1983) defined relationship marketing as a strategy for attracting, maintaining and enhancing customer relationship. Gro¨nroos (1994) speaks of ‘mutual exchange’ and fulfillment of promises. Sustainable marketing strategy demands that a company should be able to leverage upon the life time value of existing customers, as reducing “defections 5 percent can boost profits from 25 to 85 percent” (Giffler, 1998; Pechi, 2000).
The importance of relationship marketing has become prominent with the use of technology as a key-driving force in welding relationships with customers (Veloutsou, Saren, & Tzokas, 2002; O’Malley & Mitussis, 2002). The underlying assumption is that building relationships with customers would help in retaining them (Gwinner, Gremler, & Bitner, 1998), and is perceived as a strategy for managing and retaining customers (Varki & Wong, 2003).
Winer (2001) visualizes Customer Relationship Management as the new philosophy for marketing and managing customers. In the past Customer Relationship Management (CRM) did not gain momentum in the organization due to limited accessibility and reach of communication technology networks. The commercialization and increased use of Internet has made applicability of CRM in marketing possible. Internet and mobile telecommunications are being increasingly adopted for serving the customers. Usage of mobile networks in marketing and managing relationships is being recognized by companies (Urbaczewski, Valacich, & Jessup, 2003). Companies have changed the focus to customer orientation and have sought novel ways to provide value to customers (Sinisalo, Salo, Karjaluoto, & Leppa¨niemi, 2005). Research posits that across the world, the use and accessibility to mobile communications has nothing to do with per capita income or Internet accessibility (Dholakia & Dholakia, 2004). The high penetration of m-commerce posits opportunities for reaching customers, providing varied services, and enabling mobile-based shopping and service experiences (Samuelsson & Dholakia, 2003). Marketers have opted technology for fostering ubiquitous contact with the consumers. Customer contact and interaction is a prerequisite in the consumption process. Though there may be new stream of consumers purchasing the services and products of the organizations, retaining existing customers presents a challenge for all organizations.