CUSTOMER RETENTION STRATEGIES FOR THE TEA INDUSTRY IN SRI LANKA

Author: Tehzeeb Bishri

ABSTRACT

The Sri Lankan tea industry faces intensified challenges in customer retention, with high churn rates and a declining customer base exacerbated by economic volatility, supply limitations, and rising production costs. This research investigates factors influencing customer retention (CR) for a prominent Sri Lankan tea exporter, referred to as “The Company.” With a primary export market spanning 36 countries, “The Company” contends with a high 35.9% churn rate, significantly above the industry average of 16.4%, risking long-term sustainability. A comprehensive review of customer satisfaction (CS), switching costs, price perception, and perceived service quality (PSQ) provides a framework for analyzing CR in Sri Lanka’s competitive tea market. Utilizing insights from relationship marketing theory (RMT) and SERVQUAL, the study highlights how CS, fair pricing, and ethical practices drive loyalty and repurchase intent in the business-to-business (B2B) and consumer (B2C) tea sectors. This study also addresses a literature gap by examining CR specifically within the tea industry, distinguishing it from other sectors previously studied. Findings are anticipated to offer “The Company” and similar entities strategic directions for bolstering customer loyalty, with implications for maintaining competitive advantage through customer-centric improvements tailored to industry-specific dynamics.

Keywords: Customer Retention, Customer Satisfaction, Perceived Service Quality, Price Perception, Switching Costs, Relationship Marketing Theory, Tea Industry in Sri Lanka, Competitive Advantage

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