This paper proposes the theoretical framework and model of decision making of customer retention based on customer identification. First, it proposes the 3dimentional framework model of customer identification, which incorporates the dimensions of Customer Lifetime Value, Customer Perceived Value, and Accessibility under Competition. Second, it analyses the significance of customer identification to customer retention theoretically through establishing customer identification model. Third, it explains the procedure and method of customer retention decisionmaking based on customer identification. Finally, by establishing the decisionmaking model of customer retention, it analyses the pricing strategies incorporating the factor of customer loyalty under two pricing modes respectively, which are uniform pricing and discriminating pricing.