Paper Info
Title
Measuring Switching Costs and the Determinants of Customer Retention in Internet-Enabled Businesses: A Study of the Online Brokerage Industry
Abstract
The ability to retain and lock in customers in the face of competition is a major concern for online businesses, especially those that invest heavily in advertising and customer acquisition. In this paper, we develop and implement an approach for measuring the magnitudes of switching costs and brand loyalty for online service providers based on the random utility modeling framework. We then examine how systems usage, service design, and other firm and individual-level factors affect switching and retention. Using data on the online brokerage industry, we find significant variation (as much as a factor of two) in measured switching costs. We find that customer demographic characteristics have little effect on switching, but that systems usage measures and systems quality are associated with reduced switching. We also find that firm characteristics such as product line breadth and quality reduce switching and may also reduce customer attrition. Overall, we conclude that online brokerage firms appear to have different abilities in retaining customers and have considerable control over their switching costs.
Year
DOI
Venue
2002
10.1287/isre.13.3.255.78
Information Systems Research
Keywords
Field
DocType
online service provider,customer acquisition,internet-enabled businesses,online brokerage industry,online brokerage firm,online business,customer retention,systems usage,customer demographic characteristic,reduced switching,customer attrition,switching costs,systems quality,service design,service provider
Service design,Customer retention,Economics,Brand loyalty,Customer attrition,Loyalty business model,Service provider,Product line,Marketing,The Internet
Journal
Volume
Issue
ISSN
13
3
1047-7047
Citations 
PageRank 
References 
202
12.02
8
Authors
2
Search Limit
100202
Name
Order
Citations
PageRank
Pei-yu Sharon Chen138739.66
Lorin M. Hitt22426223.11