Professional Documents
Culture Documents
One effort to build a generalisable model of customer switching behaviour was undertaken by
Susan Keaveney (1995). Using a technique where people remembered critical incidents, the
author asked respondents about their reasons for switching across 25 types of services in a six
month time period. A critical incident was defined as an event or interaction or series of
interactions between a customer and a service firm that caused that customer to switch to
another service provider. All responses were coded and then categorised by a panel of experts
into eight groups describing their reasons for switching, as shown in Table 1.
Keaveney¶s research has made two major contributions to the literature on switching
behaviour. First of all, it was generalisable across multiple markets rather than a single study.
Secondly, the research provided not just a qualitative picture of a switching behaviour in
services markets, but gave benchmarks regarding a proportion of consumers who were likely
to switch service providers for specified reasons. The findings indicated that µcore service
failure¶ was the most common cause of switching, and µinvoluntary switching¶ the least
reported reason for switching. However, the key limitation in the Keaveney research was that
it asked people to focus on specific incidents or interactions with the service provider that
resulted in switching. This is likely to bias respondents towards more µservice provider
problems¶ and away from other factors influencing switching, such as customer moving or
personal reasons (these were eliminated from the Keaveney study).c
While much academic research focuses on customer satisfaction, a side stream of research
calls for an exploration of those for whom these efforts have failed, namely customers who
have left the company. It is thought that those (former) customers of a brand can illuminate
the reasons for customer defection.
Intuitively, it is assumed that people who terminated a relationship with a company were
dissatisfied or disappointed with the company¶s offering, and this can be remedied. It is a
widely shared belief in the industry that if the company can just fix those mistakes, then it can
achieve almost a zero defection rate. This has led to a rise in customer retention marketing
efforts.
However, research into the antecedents of customer defection showed that not all of the
customers who left a company did so because of dissatisfaction due to failure of a good or
service. Reichheld reported ³Y
Y
Y
Y
Y
YÑ (cited in Fortune, 1993). In a similar vein, Mittal
and Lassar (1998) found that one third of current customers who said they were satisfied with
the service provider also expressed an intention to switch. Further, academic studies into the
reasons for customer defection (e.g. Schneider, 1973; Keaveney, 1995; Colgate , 1996)
found that some groups of customers left their service providers for reasons that were beyond
the control of the service provider and the customer, such as the customer moving house.
á
This paper analyzes consumer switching behaviors from the perspectives of consumer
psychology and interactions with the society, such as consumer's emotional intelligence,
relationship involvement and personality traits. We survey life insurance policyholders in
Taiwan and Hong Kong. Our results show that when service failures are more serious,
consumers with higher emotional intelligence exhibit lower intention to switch than those with
lower emotional intelligence. Similarly, the more serious the service failures, the more the
consumers with internal locus-of-control orientation exhibit intention to change their existing
consumption than those with external locus-of-control orientation. Further for more serious the
service failures, the higher the relationship involvement with customers, the more their intention
to switch is reduced. The unique contribution of this paper is that it combines multivariate
statistical analysis and a non-linear neural fuzzy network model structure to verify the collected
data. The paper concludes with a discussion of management implications and recommendations
for future studies.
c
c
ccc
c c c
cc cc
c c
c
c c c c c cc
c c cc
c
cc
c c
cccc
c cc
c
cccc
cc
c cc c
c
c
cc cc
cc c
c
c c
c c
c ccc
c
c
cc
c
c
c c cc
ccc
cc c
cc cc ccc c
c
c ccccccc
ccc cccc cc
c
ccc
c
cc c
c
cccc c cc c
c
c c c
c
c
c c
cc
cc
c c cc
cc c c
ccc cc c
c cc c cc
c c cc c
ccc c c
cc c
c
c
cc cc cc cccccc
cccc
c c
c c
c c!c cc
Aeithaml, Berry & Parasuraman (1996) offer a conceptual model of service quality. This
service quality affects particular behaviors that indicate whether customers will remain loyal to
cost effective than attracting new ones. 3. Customer defections should be a fundamental
Advertising, promotion, and sales costs are expenses required for attracting new customers. 6.
At the beginning of the relationship, there is a period of time where customers are non-profitable.
It can take approximately four years to recover the sales costs invested in obtaining a new
customer. 7. Customer assessments of service quality that are high lead to positive behavioral
intentions, which strengthen the relationship between the individual and the organization.
Conversely, assessments of service quality that are low lead to customer behavioral intentions
that are unfavorable and result in a weakened relationship. Therefore behavioral intentions are
$%
&#'(()*&[
!
!&
"
+
!!
!
$ /#0[
#'((1!*&
!
! #
! &2
$,#'((-*&
[
. Properly identifying disloyal customers and understanding why they left can be valuable tools
acquires a new customer, retention efforts should be set in place. The organization should try to
learn what the customer¶s needs are, make sure to provide fast response, make sure that the
customer feels cared for, and resolve any complaints quickly (Weinstein et al., 1999f). There are
many ways to build loyalty to increase favorable behavioral intentions. Organizations could
send sales people to work at the offices of their best customers, participate in their customer¶s
events, interview the customer¶s customers, have a retreat with major customers to share best
pricing strategy, reward customers for referring new business, develop a three to five year
business plan with customers, and even partner with key accounts on industry research projects
Customer retention branches off into many other significant areas such as value-added services,
supply chain relationships, use of information systems to service customers better, and very
cccc
cccc ccc c# cccc$%%&cc
!+ 3 #
/ &