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Switching costs impact on customer retention in telecommunication

Author

Listed:
  • Mira Thoumy
  • Elie Abdallah

Abstract

Purpose: The purpose of this article is to assess the switching costs impact on the customer retention in the Lebanese telecommunication industry. Design/methodology/approach: Based on previous literature around customer retention and switching costs, a qualitative survey was conducted on one of the two operators managing the telecommunication market in Lebanon. Focus groups were organized to capture the point of view and perspective of top managers of the operator, results were then coded, and analyzed. Findings: Due to the current duopoly and status quo of the Lebanese telecommunication market, owned completely by the government and managed by two operators sharing the market equally and offering nearly the same portfolio, technologies and network coverage, the switching costs include only the time and effort needed to switch to the other operator, the financial fees to be paid upon buying a new subscription, the attachment to mobile number, and the relational loss from breaking bond with the current provider. Research limitations/implications: Focus group sessions were conducted with managers of one of the two telecom operators in Lebanon, and it might be relevant to interview the managers of the other operator as well. This topic was tackled from the provider’s point of view; it would be interesting to check the customers’ point of view. Practical implications: Managers in the Lebanese telecommunication industry can prepare marketing strategies including customer retention programs and well-designed switching costs to protect and increase their market share once this sector induces more competition either with the introduction of the number portability service or with the privatization of this sector in Lebanon. Originality/value: The customer retention and switching costs constructs are not yet studied in the Lebanese telecommunication market, and also due to the saturation in this industry, customer retention is becoming an imperative topic to all operators in this business.

Suggested Citation

  • Mira Thoumy & Elie Abdallah, 2017. "Switching costs impact on customer retention in telecommunication," Competition and Regulation in Network Industries, , vol. 18(3-4), pages 198-216, September.
    • Handle: RePEc:sae:crnind:v:18:y:2017:i:3-4:p:198-216
    DOI: 10.1177/1783591718782307
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    References listed on IDEAS

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    1. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 515-539.
    2. Wael Bakhit, 2016. "Impact of Disruptive Innovations on Mobile Telecom Industry in Lebanon," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 5(3), pages 80-94, April.
    3. Gerpott, Torsten J. & Rams, Wolfgang & Schindler, Andreas, 2001. "Customer retention, loyalty, and satisfaction in the German mobile cellular telecommunications market," Telecommunications Policy, Elsevier, vol. 25(4), pages 249-269, May.
    4. Joseph Mbawuni & Simon Gyasi Nimako, 2016. "Why Dissatisfied Mobile Subscribers Stay: Role of Service Use Experience, Commitment and Corporate Reputation," International Business Research, Canadian Center of Science and Education, vol. 9(6), pages 112-119, June.
    5. Thomas H. Brush & Ramesh Dangol & Jonathan P. O'Brien, 2012. "Customer capabilities, switching costs, and bank performance," Strategic Management Journal, Wiley Blackwell, vol. 33(13), pages 1499-1515, December.
    6. Ge Zhu & Shan Ao & Jianhua Dai, 2011. "Estimating the switching costs in wireless telecommunication market," Nankai Business Review International, Emerald Group Publishing Limited, vol. 2(2), pages 213-236, June.
    7. Joey R. Ghaleb, 2001. "The Lebanese Telecommunication Sector and The Impact of Privatization on The Labor Market," Working Papers 0107, Economic Research Forum, revised 03 Jan 2001.
    8. Jones, Michael A. & Mothersbaugh, David L. & Beatty, Sharon E., 2002. "Why customers stay: measuring the underlying dimensions of services switching costs and managing their differential strategic outcomes," Journal of Business Research, Elsevier, vol. 55(6), pages 441-450, June.
    9. Luciene Eberle & Gabriel Sperandio Milan & Celso Augusto de Matos, 2016. "Antecedents to Customer Retention in a Corporate Context," Brazilian Business Review, Fucape Business School, vol. 13(1), pages 1-23, January.
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