Consumers’ propensity for rollover service contracts: the influences of perceived value, convenience and trust on service loyalty

Abstract

ABSTRACT Rollover contracts are becoming increasingly commonplace in a range of service markets. Such contracts automatically renew for a further term when a contractual period comes to an end. Rollover contracts represent a unique form of loyalty, because a consumer who signs a rollover contract at the time of initial purchase, signals a commitment to stay loyal to the firm before they have even experienced the service delivery. Prior studies of automatic renewal have predominantly been undertaken in the domain of consumer economics, and the psychological dimension of buyer decision making has yet to be explored. The desire for convenience was found to have the strongest influence on consumers’ propensity for rollover service contracts. Additionally, trust as a mediator of reputation, and perceived value also influence consumers’ attitudes and behavioral intentions for selecting these products. It is concluded that service providers should ensure that consumers recognize that there is an element of reciprocity which is mutually beneficial to both parties in the provision of such contracts.