Renew or cancel? Drivers of customer renewal decisions for IT-based service contracts

Abstract

Manufacturers increasingly integrate information and communication technologies into their products so that they can provide IT-based services. Organizations that formerly concentrated on transactional sales thus confront a new challenge associated with managing service usage—retention and extracting value from investments in smart technology. This study combines a marketing and an information systems perspective in a field study conducted jointly with a large European car manufacturer. Understanding the renewal decision for IT-based service contracts requires knowledge from both disciplines. The paper shows that combining behavioral predictor variables stemming from marketing research and technology-related perceptual variables stemming from technology acceptance research increases the explanatory power and prediction accuracy of forecasting models for customer renewal decisions. Specifically, the authors show that perceptions of usefulness become more important the longer customers use IT-based services and the more services they use within the service contract.