Volume 40, Issue 6 (November 2012)
Measurement of Switching Cost on the Customer Retention in the Banking Industry
This study discusses the relationships among switching costs, inertia, and customer retention in the case of customers of banking service industries and discusses in depth whether inertia affects switching costs. In this study, we surveyed 500 existing banking account holders in Taiwan and acquired 404 valid responses. The respondents were required to submit viewpoints regarding their most familiar financial institutions. The results show that the perception of switching costs and inertia has a positive impact on banking service industries’ customer retention. Customer word of mouth is a major factor in customer retention, the attraction of new customers, and customer retention intent. Financial service providers should also attach importance to customer segmentation in order to satisfy the real needs of various types of customers and thereby increase profits and competitiveness. This paper is an important empirical analysis highlighting the significance of the effects of switching costs and inertia on customer retention in banks.