Customer Perceived Value, Satisfaction, and Loyalty: The Role of Switching Costs

It is a marketplace reality that marketing managers sometimes inflict switching costs on their customers, to inhibit them from defecting to new suppliers. In a competitive setting, such as the Internet market, where competition may be only one click away, has the potential of switching costs as an exit barrier and a binding ingredient of customer loyalty become altered? To address that issue, this article examines the moderating effects of switching costs on customer loyalty through both satisfaction and perceived-value measures. The results, evoked from a Web-based survey of online service users, indicate that companies that strive for customer loyalty should focus primarily on satisfaction and perceived value. The moderating effects of switching costs on the association of customer loyalty and customer satisfaction and perceived value are significant only when the level of customer satisfaction or perceived value is above average. In light of the major findings, the article sets forth strategic implications for customer loyalty in the setting of electronic commerce. © 2004 Wiley Periodicals, Inc. In the consumer marketing community, customer loyalty has long been regarded as an important goal (Reichheld & Schefter, 2000). Both marketing academics and professionals have attempted to uncover the most prominent antecedents of customer loyalty. Numerous studies have Psychology & Marketing, Vol. 21(10):799–822 (October 2004) Published online in Wiley InterScience (www.interscience.wiley.com) © 2004 Wiley Periodicals, Inc. DOI: 10.1002/mar.20030