The differential effects of switching costs and attractiveness of alternatives on customer loyalty

Abstract

There is an increasing recognition among marketing scholars and practitioners of the importance of the influence of switching costs and attractiveness of alternatives in the relationship between customer satisfaction and customer loyalty. To date, however, there is a lack of research about the process through which these variables influence the satisfaction-loyalty relationship. This dissertation aims to evaluate the importance of switching costs and attractiveness of alternatives in explaining customer loyalty. Using a revised model of the European Customer Satisfaction Index (ECSI), applied to the banking industry, this study intends to include switching costs as perceived by customers and the attractiveness of alternatives as independent antecedents of customer loyalty and as moderators of the impact of satisfaction on loyalty. Both direct and moderating effects of switching costs and attractiveness of alternatives are tested, using a methodology based on structural equation models. The main findings of this study indicate that both constructs influence loyalty directly and the strength of the satisfaction-loyalty relationship.