Customer Retention and Entrenchment Strategies and Competitiveness of Commercial Banks in Nakuru City, Kenya
Year: 2026
Type: article
Abstract: Customer retention and entrenchment strategies are deliberate organizational approaches through which firms sustain long-term customer relationships, reduce switching behaviour and strengthen customer commitment. Commercial banks in Kenya have invested heavily in such strategies, yet intensifying fintech and mobile-money competition, rising customer churn and fluctuating profitability indicate that their contribution to competitiveness remains unclear. The purpose of this study was to examine the effect of customer retention and entrenchment strategies on the competitiveness of commercial banks in Nakuru City, Kenya. Specifically, it assessed the influence of service quality, service personalization, product bundling and digital platforms on competitiveness. The study was anchored on Relationship Marketing Theory, the Resource-Based View, Switching Cost Theory and Customer Lifetime Value Theory. A descriptive correlational research design was adopted. The study targeted 376 managements and customer-facing staff in 62 commercial bank branches in Nakuru City, from which a sample of 111 respondents was drawn using the Nassiuma formula and stratified random sampling. Data were collected through a structured questionnaire, of which 96 were returned (86.5% response rate), and analysed using descriptive statistics and multiple regression. The four strategies jointly explained 62.6% of the variation in competitiveness (R² = 0.626; F = 38.068, p < 0.05). Service quality had the strongest influence (β = 0.460, p < 0.05), followed by digital platforms (β = 0.411, p < 0.05), service personalization (β = 0.277, p < 0.05) and product bundling (β = 0.159, p < 0.05), and all four null hypotheses were rejected. The study concludes that service quality and digital platforms are the principal drivers of bank competitiveness, while personalization and bundling play significant but supporting roles. It recommends that commercial banks prioritize responsive and accurate service delivery and timely complaint resolution, invest in secure, reliable and user-friendly digital platforms, strengthen data-driven customer segmentation, and redesign product bundles around customer needs to improve retention and sustain competitive advantage.
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225637885