Switchers and Stayers: An Empirical Examination of Customer Base of an Automobile Wheel Care Centre
Journal of Services Research › Vol. 4 Nbr. 2, October 2004
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Summary
The present research attempts to find out the reasons responsible for retention and loss of customers. While it is well accepted that customer retention costs are lower than customer acquisition costs, yet the, determinants of consumer behaviour in switching service providers are not well understood. Based on factor and discriminant analysis the study revealed that four factors, namely, (i) temporal convenience, (ii) purchase involvement, (iii) ego involvement, and (iv) active loyalty, play a significant role in influencing the consumer behaviour towards switching. Contrary to popular notion, the 'people factor' was not found to be important. Implications of the findings are discussed in the present study.
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Extract
Switchers and Stayers: An Empirical Examination of Customer Base of an Automobile Wheel Care Centre
In a fiercly competitive environment, strategic marketing has the difficult task to balance customer acquisition and customer retention costs. The lifetime value of a customer becomes critical in deciding retention strategies. With each additional year of relationship between a company and a consumer leading to reduction in servicing costs. Retaining customers has, therefore, become a prime focus of marketing effort. However customer retention costs must yield better profits through increased buying, willingness to pay a premium and acquisition of new customers through positive referrals.
Over the last several years, researchers have established that viability and profitability of a firm is adversely affected because of customer switching. Statistics reveal that US corporations lose half of their customers in five years. The customer disloyalty at this rate reduces corporate performance by 25 to 50 percent (Richheld & Teal, 1996). Retaining customers through loyalty programs is no longer a luxury (Keaveney, 1995).In spite of the increased awareness that customers differ in their attitudes and behaviour, very little is known about how and why they differ. If the service providers are able to identify these attitudinal and behavioural differences among different groups of cu...See the full content of this document
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