The impact of switching costs on the customer satisfaction‐loyalty link: mobile phone service in France

TLDR

Switching costs shape the relationship between customer satisfaction and loyalty, sometimes masking dissatisfaction among seemingly loyal customers. This study investigates how switching costs moderate the satisfaction‑loyalty link and explores heterogeneity across customer segments. In the French mobile‑phone market, evidence confirms that higher switching costs weaken the direct link between satisfaction and loyalty, offering managerial insights.

Abstract

The main objective of customer satisfaction programs is to increase customer retention rates. In explaining the link between customer satisfaction and loyalty, switching costs play an important role and provide useful insight. For example, the presence of switching costs can mean that some seemingly loyal customers are actually dissatisfied but do not defect because of high switching costs. Thus, the level of switching costs moderates the link between satisfaction and loyalty. The purposes of this paper are: to examine the moderating role of switching costs in the customer satisfaction‐loyalty link; and to identify customer segments and then analyze the heterogeneity in the satisfaction‐loyalty link among the different segments. An empirical example based on the mobile phone service market in France indicates support for the moderating role of switching costs. Managerial implications of the results are discussed.