The effect of brand on churn in the telecommunications sector

Abstract

Purpose – The present paper aims to investigate the effect of network provider, customer demographics, customer satisfaction and perceived switch costs on churn in the mobile telecommunications market. Design/methodology/approach – The study is carried out as a longitudinal, two-wave study of mobile telecommunications customers in Norway: n=1,499 (wave 1) and n=976 (wave 2). Churn is measured as change in the mobile network provider between the two waves. The data are analysed as a logistic regression with the independent variables provider, gender, satisfaction, switch costs and age. Findings – The analysis shows significant effects of provider, satisfaction, switch costs and age and of the interaction between satisfaction and provider. Gender has no significant effect on churn. Provider effects are interpreted as effects of brand image since other known influences on churn (satisfaction, switch costs and demographics) have been controlled for in the design. Research limitations/implications – Further research is necessary in order to single out which brand aspects are responsible for the effects of brand ownership and to ensure the generality of the findings outside Scandinavia. Practical implications – The findings indicate that a strong brand image makes a company less susceptible to customer churn caused by low satisfaction. Originality/value – The relation between brand ownership and churn in the mobile telecommunications sector has not been reported previously.