Understanding the Customer Base of Service Providers: An Examination of the Differences between Switchers and Stayers

Abstract

Creating and maintaining customer loyalty has become a strategic mandate in today's service markets. Recent research suggests that customers differ in their value to a firm, and therefore customer retention and loyalty-building efforts should not necessarily be targeted to all customers of a firm. Given these sentiments, it is becoming increasingly necessary for firms to have a thorough understanding of their customer base. Yet current knowledge is limited in providing insights to firms regarding the differences within their customer base. This research comprises two studies in which the authors examine the differences among internal customer groups in a service industry. As theory suggests and as is empirically validated here, customers who have switched service providers because of dissatisfaction seem to differ significantly from other customer groups in their satisfaction and loyalty behaviors. The findings offer some interesting implications for both marketing theory and practice.