We are happy to announce that Dr. Hans Risselada from the University of Groningen will give a guest talk on „The impact of competition on key drivers of customer churn“ in the PhD seminar on Quantitative Marketing Research.
The impact of competition on key drivers of customer churn: A Meta-analytic approach
by Roelof Hars, Arjen Onrust, Hans Risselada and Jaap Wieringa; University of Groningen, Groningen, The Netherlands
Improving customer welfare by stimulating the right customers to churn is a goal widely shared by competition regulators. A popular method to reach this goal is to introduce more competitors in an industry. We show that such policy can be counterproductive. We argue that a greater extent of competition can lower economic switching costs, but may simultaneously increase psychological switching costs to the extent of negating any economic benefit. Depending on the process that dominates, competition can either strengthen or weaken the effect of key churn drivers. In this paper, we explore the net effect of these two processes in a meta-analysis and a survey study. Our results suggest that in general, competition weakens the effect of churn drivers, with the exception of switching intentions. We also show that these effects depend on the presence of other factors that determine the absolute size of customers’ psychological switching costs.