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.

10.34785/J018.2022.492

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

References

Switching in Insurance Industry, Journal of Brand Management, 2 (3), 135-158. (In Persian)
Aghajari, N. (2016). The Effect of Percived Price and Quality on Consumer Satisfaction and Loyalty in Home Appliance Products. (Unpublished master thesis). Shahid Chamran University of Ahvaz. (In Persian)
Ahn, J. H., Han, S. P., & Lee, Y. S. (2006). Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry. Telecommunications policy, 30(10-11), 552-568.‏
Akamavi, R. K., Mohamed, E., Pellmann, K., & Xu, Y. (2015). Key determinants of passenger loyalty in the low-cost airline business. Tourism management, 46, 528-545.
Anuwichanont, J., & Rajabhat, S. D. (2011). The impact of price perception on customer loyalty in the airline context. Journal of business & economics research, 9(9), 37-50
Asgari, M.; Taghva, M. R., & Taghavifard, M.T. (2018). Churn Prediction in Iran Banking Industry Case of a Private Iranian Bank, Public Management Researches, 11 (41), 57-82. (in Persian)
Auh. S., & Johnson. M. D. (2005). Compatibility effects in evaluations of satisfaction and loyalty, Journal of Economic Psychology, 26, 35–57.
Aulet, B. (2013). Disciplined Entrepreneurship: 24 Steps to a Successful Startup. New Jersey: John Wiley & Sons.
Bahrami, Sh. (2016). Identifying and Pririoting the Factor Affecting Customer Churn in E-banking Services of Keshavarzi Bank in Saravan City. (Unpublished master thesis). University of Sistan and Baluchestan. Iin Persian)
Beigmoradi, R., Rousta, A., & Doshmanziyari, E. (2020). Explaining customer loyalty based on brand personality in the home appliance industry, Based on a Grounded Theory approach. Consumer Behavior Studies Journal, 7 (1), 130-144. (in Persian)
Burnham, T. A., Frels, J. K., & Mahajan, V. (2003). Consumer switching costs: A typology, antecedents, and consequences. Journal of the Academy of marketing Science, 31(2), 109-126.‏
Buttle, F., & Burton, J. (2002). Does service failure influence customer loyalty? Journal of Consumer Behaviour, 1(3), 217-227.‏
Chandar, M., Laha, A., & Krishna, P. (2006, March). Modeling churn behavior of bank customers using predictive data mining techniques. In National conference on soft computing techniques for engineering applications (SCT-2006), 24-26.
Chuah, H. W., Marimuthu, M., & Ramayah, T. (2014). The effect of perceived value on the loyalty of Generation Y mobile internet subscribers: A proposed conceptual framework. Procedia-Social and Behavioral Sciences, 130, 532-541.
Dadkhah, M.R. (2008). Customer orienation. 6th edition, Tehran: Shahr Ashoob. (In Persian)
Ebrahimi, M. (2011). Iranina Brand Position in Home Appliances from the Customer View. (Unpublished master thesis). Allameh Tabatabi University. (In Persian)
Edward, M., & Sahadev, S. (2011). Role of switching costs in the service quality, perceived value, customer satisfaction and customer retention linkage, Asia Pacific Journal of Marketing and Logistics, 23(3), 327-345
Emami, L., Pourashraf, Y., & Toulabi, Z. (2015). A Model for Customers Switching from National Bank by Applying Structured Equations (Case Study: National Bank Branches in Ilam Province). Journal of Marketing Management, 10 (26), 25-46. (In Persian)
Ershadi, M.J., & Moghadam, Z. (2019). Determine the Importance of Website Quality Criteria from the Point of view of Users EQUAL Techniques and Fuzzy Network Analysis Process. Consumer Behavior Studies Journal, 6 (2), 24-45. (In Persian)
Fornell, C. (1992). A National Customer Satisfaction Barometer: The Swedish Experience. Journal of Marketing, 56, 6-21.
Ganesh, J., Arnold, M. J., & Reynolds, K. E. (2000). Understanding the customer base of service providers: an examination of the differences between switchers and stayers. Journal of marketing, 64(3), 65-87.‏
Grégoire, Y., & Fisher, R. J. (2006). The Effects of Relationship Quality on Customer Retaliation. Marketing Letters, 17(1), 31-46.
Hosseini A., Shirkhodaei M., & Namvar, M. (2018). Investigating the Effects of Affiliate Marketing Tactics on Behavioral Loyalty with the Mediatory Role of Customer Appreciation, Commerce Strategies, 15 (11), 54-71. (In Persian)
Jamal, A., & Naser, K. (2002). Customer satisfaction and retail banking: an assessment of some of the key antecedents of customer satisfaction in retail banking. International Journal of bank marketing, 20 (4), 146-160.
Jinbo, S., Xiu, L., & Wenhuang, L. (2007, June). The Application of AdaBoost in Customer Churn Prediction. In Service Systems and Service Management, International Conference on 2007, 1-6. ‏
Kaur, G., R. Sharma, & Mahajan, N. (2012). Exploring customer switching intentions through relationship marketing paradigm. International Journal of Bank Marketing, 30(4), 280-302.
Keiningham, T. L., Varra, T. G., Aksoy, L., & Henri, W. (2005). Loyalty Myths: Hyped Strategies That Will Put You Out of Business And Person TacticsThat Really Work. New Jersey: John wiley & Sons.
Kim, H. S., & Yoon, C. H. (2004). Determinants of subscriber churn and customer loyalty in the Korean mobile telephony market. Telecommunications policy, 28(9-10), 751-765.‏
Klemperer, P. (1995). Competition when consumers have switching costs: An overview with applications to industrial organization, macroeconomics, and international trade. The review of economic studies, 62(4), 515-539
Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: the construct, research propositions, and managerial implications. The Journal of Marketing, 1-18.
Lee, J., & Marlowe, J. (2003). How consumers choose a financial institution: decision-making criteria and heuristics. International Journal of Bank Marketing, 21(2), 53-71.‏
Liu, Ch. T.; Guo, Y. M. & Lee, Ch. H. (2011). The Effects of RelationshipQuality and Switching Barriers on Customer Loyalty. International Journal of Information Management, 31(1), 71-79.
Mohajeri, M., Roosta, A., Hosseini, M., & Hamidizadeh, M. R. (2013). A Model for Customers Switching Barriers for Increasing Customer loyalty, Journal of Business Management Perspective, 13 (2), 31-47. (In Persian)
Mohammad Shafiee, M., Seify M., & Mohammadi, M. (2019). The Effects of Customer Relationship Management on Improving Internal Processes, Customer Satisfaction and Profitability (Case Study: Isfahan Social Security Organization Branches), Commerce Strategies, 15 (12), 31-48. (In Persian)
Moludi, F. (2014). Investigation the Customer Churn by Considering Different Levels. (Unpublished master thesis). Ferdowsi University of Mashhad. (In Persian)
Mortazavi, S., Nazemi, Sh., & Ayatigazar, M. (2011). The Moderating Role of Competitors' Attractiveness and Switching Cost on the Relationship Between Price, Service Quality, and Customer Annoyance in Real Estate Sector of Sina Insurance Co. Management Studies in Development and Evolution, 18(63), 85-114. (In Persian)
Mosavi, S. M., Sangari, M.S., & Keramati, A. (2018). An integrative framework for customer switching behavior, The Service Industries Journal, 38 (15/16), 1067-1094.
Moshtaq Khorasani, H. (2013). The Mediating Effect of customer Commitment in the Relationship betweeen Mental Norms and Switching Cost of Customer Loyalty. (Unpublished master thesis). Ferdowsi University of Mashhad. (In Persian)
Nejat, S., Shirkhodaei, M., & Bahmani Tabrizi. (2018). Investigating effect of Nostalgic Brand Experience, Brand Satisfaction, and sustainable Marketing on Brand Love and its Consequences, Journal of Brand Management, 4 (12), 13-39. (In Persian)
Nesset, E., & Helgesen, Ø. (2014). Effects of switching costs on customer attitude loyalty to an airport in a multi-airport region. Transportation Research Part A: Policy and Practice, 67, 240-253.‏
Oliver, R. L. (1999). Whence consumer loyalty? The Journal of Marketing, 33-44.‏
Pedram, A., & Ghaempanah, M. (2016). The Effect of Relationship Marketing tactics on Customer Loyalty in Pars Khazar Manufacturing Company. International Conference on Management and Accounting. (in Persian)
Pick, D., & Eisend, M. (2014). Buyers’ perceived switching costs and switching: a meta-analytic assessment of their antecedents. Journal of the Academy of Marketing Science, 42(2), 186-204.
Rahimnia, F., & Bagheri, S. (2016). The Relationship between Service Quality, Corporate Image, and Perceived Value with Customer Loyalty: Moderator Role of Switching Costs (Case of: Mellat Bank Customers in Mashhad), Journal of Brand Management, 3 (1), 151-172. (in Persian)
Rodan, A., Faris, H., Alsakran, J., & Al-Kadi, O. (2014). A Support Vector Machine Approach for Churn Prediction in Telecom Industry. Information, 17(8), 3961-3971.
Shin, D. H., & Kim, W. Y. (2008). Forecasting Customer Switching Intention in Mobile Service: An Exploratory Study of Predictive Factors in Mobile Number Portability. Technological Forecasting and Social Change, 75(6), 854-874.
Tajnesaei, H. R., & Mahdieh, O. (2015). Investigation the relationship between switching cost and Relationship quality with customer loyalty in automobile parts manufacturer companies. Marketing Research Conference, 1-18, Shahid Beheshti Conference Center, Tehran. (In Persian)
Tavakoli, A., Kafashpoor, A. & Nikoo, H. (2017). Investigating the Effect of Perceived Service Quality on Customer Loyalty Mediated by Customer Satisfaction and Corporate Image With Regard to the Role of Moderating the switching costs (Case Study: Sina Bank Branches in Mashhad). Journal of Strategic Management Researches, 23(65), 185-207. (In Persian)
Tazari, N., & Bolourian Tehrani, M. (2012). A Study on the Critical Success Factors in Customers Relationship Management (Case Study: Saman Insurance Company). Journal of Marketing Management, 7(16), 81-97. (In Persian)
Samizadeh, R., Namdar Zangeneh, S., & Vatankhah, S. (2016). A Model for Customer Churn Prediction in the Iranian Telecommunication Companies. Journal of Management and Development Process, 29 (2), 99-116. (In Persian)
Wang, C. Y., & Wu L. W. (2012). Customer loyalty and the role of relationship length. Managing Service Quality, 22(1), 58-74.
Wong, R., Tong, C., & Wong, A.)2014(. Examine the effects of customer satisfaction on customer loyalty: an empirical study in the healthcare insurance industry in Hong Kong. British Journal of Economics, Management & Trade, 4(3), 372-399.
Consumer Behavior Studies Journal
Volume 8, Issue 4
January 2022
Pages 46-61

Files

Share

How to cite

Statistics