The influence of satisfaction, trust and switching barriers on customer retention in a continuous purchasing setting

Abstract

Adopts a holistic approach that examines the combined effects of satisfaction, trust and switching barriers on customer retention in a continuous purchasing setting. Argues that such an approach helps uncover hitherto neglected effects on retention and, in the process, unveils more cost effective ways of retaining customers. Drawing on this framework develops several hypotheses regarding the main and interaction effects of customer satisfaction, trust and switching barriers on retention. Tests these hypotheses on data from a large‐scale mail survey of fixed line telephone users in the UK, finding that both customer satisfaction and trust have strong positive effects on customer retention. Contrary to some assertions in the literature, however, finds that the effect of trust on retention is weaker than that of satisfaction. Nevertheless, the interaction between trust and satisfaction also has a significant effect on retention, indicating that building both customer satisfaction and trust is a superior strategy to a focus on satisfaction alone. Qualitative evidence from the survey offers further support for this finding. Even a “satisfying” service recovery process might be inadequate to prevent loss of trust, with significant implications for future consumer behaviour. Finally, the results show that switching barriers have both a significant positive effect on customer retention as well as a moderating effect on the relationship between satisfaction and retention. While service providers may be able to retain even dissatisfied customers who perceive high switching barriers, argues that ideally, firms should aim at a combined strategy that makes switching barriers act as a complement to satisfaction.