The impact of customer relationship characteristics on customer switching behavior

Abstract

PurposeThe purpose of this research is to show how relationship marketing has recognized the importance of building long‐term relationships in increasing firms' profitability and guaranteeing their future viability. Owing to the damaging effects that customer switching behavior could have on the development of successful relationships, understanding customers' switching decisions can represent a key step in the process of establishing, developing and maintaining successful relational exchanges. The current study aims to contribute in this direction by introducing the heterogeneity of customers in their relationship characteristics (depth, length and breadth) into the analysis of customers' propensity to switch service providers.Design/methodology/approachThe data set used to carry out this study has been obtained from a panel survey (Home Online) of technology users in the United Kingdom, and the proposed hypotheses are tested on the fixed‐line telephone sector using logistic regression. This technique associates the relationship characteristics with the probability that a switch in suppliers will take place.FindingsThe results obtained show that the length, depth and breadth of relationships help to determine customers' propensity to switch fixed‐telephone suppliers. Customers who maintain a long‐lasting relationship with the firm (length), use the service more (depth), and invest in complementary services (breadth) will be less predisposed to switch.Practical implicationsWith regard to recommendations for practitioners, the paper highlights the need for firms to renew both acquisition and retention strategies in order to take individual customer information into account. This should help them to identify and retain the most valuable customers and to optimally allocate marketing resources (from switching‐prone to non‐switching‐prone customers).Originality/valueThe main contribution of the paper is to consider relationship characteristics in the analysis of customer switching behavior. This research shows that the heterogeneity observed in the depth, length and breadth of customer‐firm relationships explains the differences in the propensity to switch service providers.