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Experience, socialization and customer retention: Lessons from the dance floor

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  • Gianna Giudicati
  • Massimo Riccaboni
  • Anna Romiti

Abstract

Experience and socialization are key factors in customer commitment and defection decisions. To study the effect of experience and social relationships on customer retention, we analyze a reality-mined co-presence network of health club members over a period of 4 years. Since central customers in the network have more social ties they will lose if they defect, we use centrality as a proxy for customer relationship switching costs. We find that long-standing customers do have a lower chance of renewing their contracts. However, in line with theoretical predictions (Burnham et al., Journal of the Academy of Marketing Science 31(2):109–126, 2003 ), the consumer’s centrality in the network (reflecting a social cost of defection) reduces customer churn rate. This study’s results indicate that the inclusion of social effects increases the predictive power of the customer churn model (Nitzan and Libai, Journal of Marketing 75(6):24–38, 2011 ), thus contributing to our understanding of the role social networks play in customer decisions. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Gianna Giudicati & Massimo Riccaboni & Anna Romiti, 2013. "Experience, socialization and customer retention: Lessons from the dance floor," Marketing Letters, Springer, vol. 24(4), pages 409-422, December.
    • Handle: RePEc:kap:mktlet:v:24:y:2013:i:4:p:409-422
    DOI: 10.1007/s11002-013-9233-6
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    1. Ascarza, & Neslin, & Netzer, & Lemmens, Aurélie & Anderson, Zachery & Fader, Peter S. & Gupta, S. & Hardie, B.G.S. & Libai, Barak & Neal, David & Provost, Foster, 2018. "In pursuit of enhanced customer retention management : Review, key issues, and future directions," Other publications TiSEM 28a90d28-6daf-42f1-bd8e-e, Tilburg University, School of Economics and Management.
    2. Alexander Funcke & Ulrik Franke, 2016. "Partial participation towards collective action: To stifle or instigate," Rationality and Society, , vol. 28(4), pages 453-467, November.
    3. Fader, Peter S. & Hardie, Bruce G.S. & Liu, Yuzhou & Davin, Joseph & Steenburgh, Thomas, 2018. "“How to Project Customer Retention” Revisited: The Role of Duration Dependence," Journal of Interactive Marketing, Elsevier, vol. 43(C), pages 1-16.
    4. Eva Ascarza & Scott A. Neslin & Oded Netzer & Zachery Anderson & Peter S. Fader & Sunil Gupta & Bruce G. S. Hardie & Aurélie Lemmens & Barak Libai & David Neal & Foster Provost & Rom Schrift, 2018. "In Pursuit of Enhanced Customer Retention Management: Review, Key Issues, and Future Directions," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 65-81, March.
    5. Lily (Xuehui) Gao & Evert Haan & Iguácel Melero-Polo & F. Javier Sese, 2023. "Winning your customers’ minds and hearts: Disentangling the effects of lock-in and affective customer experience on retention," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 334-371, March.

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