The Effect of Switching Cost on Customer‌s‌ Loyalty and Likelihood of Churn

Document Type : Quantitative Research Paper

Authors

1 Assistant Professor, Department of Management and Accounting, University of Zanjan, Zanjan, Iran.

2 Associate Professor, Department of Management and Accounting, University of Zanjan, Zanjan. Iran.

3 Master of Business Administration, Department of Management and Accounting, University of Zanjan, Zanjan, Iran.

Abstract

Increasing competition in the industry and services and increasing the level of knowledge and awareness of customers has led to more customer care. Given that it is more costly to acquire a new customer than to establish a wider and deeper relationship with current customers, the issue of customer churn and the identification of the factors affecting it is of particular importance. The purpose of this research is to investigate the effect of brand satisfaction and switching cost on customer churn. The present study is descriptive-survey method. The research population consists of home appliances buyers (domestic refrigerator) in Zanjan. The sample size was 384 people and convenience sampling method was used The data were collected through a questionnaire whose overall reliability was approved by using Cronbach Alpha. Its validity was approved by the supervisors and consultants and a number of experts. For testing the hypotheses structural equation modeling by using Amos software was utilized. The results confirm the impact of switching cost and brand satisfaction on customer churn. Increasing the switching cost reduces the likelihood of customer churn, but increasing satisfaction has a negative effect on customer churn. Positive effect of brand satisfaction on behavioral loyalty through attitudinal loyalty and the effect of brand satisfaction on behavioral loyalty through customer churn and also the switching cost on customer's churn due to brand satisfaction was confirmed. In other words, although increasing satisfaction leads to customer loyalty but with increasing likelihood of customer churn, customer loyalty decreases.

Keywords


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