Quality of service attracts new customers and ensures consumer retention. Consumer
retention provides a higher profit contribution and has to grow in terms of the value
and frequency of purchases. The importance of customer retention is underlined by the
concept of the “lifetime value” of a customer. The life time value of a customer is
calculated as follows (Christopher, 1998):
Life time value ¼ average transaction value £ yearly frequency of purchase
£ customer life expectancy
A successful business would better serve its shareholders’ needs by focusing
on customers, employees, suppliers and the wider community (Mann et al., 1999).