This paper presents a holistic model of customer retention incorporating service quality perceptions, price perceptions, customer indifference and inertia. Data from a large‐scale postal survey of telephone users in England showed that perceptions of service quality have a direct linear relationship with customer retention even in mass services with low customer contact. Price perceptions and customer indifference too were found to have a direct linear effect on retention. Furthermore, it was also seen how both price perceptions and customer indifference moderated the relationship between service quality perceptions and customer retention. A linear relationship between inertia and customer retention was not found. Furthermore, there was evidence to indicate that inertia was a relatively unstable condition and that reliance by service providers on inertia to retain customers could indeed be a risky strategy.
International Journal of Operations & Production Management – Emerald Publishing
Published: Feb 1, 2003
Keywords: Service quality; Pricing; Consumer attitudes; Customer loyalty
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