Social Effects on Customer Retention

Abstract

This study explores the role of customers' social network in their defection from a service provider. The authors use data on communication among one million customers of a cellular company to create a large-scale social system composed of customers' individual social networks. The study's results indicate that exposure to a defecting neighbor is associated with an increase of 80% in the defection hazard, after controlling for a host of social, personal, and purchase-related variables. This effect is comparable in both magnitude and nature to social effects observed in the highly researched case of product adoption: The extent of social influence on retention decays exponentially over time, and the likelihood of defection is affected by tie strength and homophily with defecting neighbors and by these neighbors' average number of connections. Highly connected customers are more affected, and loyal customers are less affected by defections that occur in their social networks. These results carry important implications for the theoretical understanding of the drivers of customer retention and should be considered by firms that aim to predict and affect customer retention.

Study of social ties as one kind of switching costs: a new typology

“…Through these marketplace communities, customers can share meaningful consumption experiences that enhance mutual appreciation of a service provider (McAlexander et al, 2002). Highly connected customers are more affected by each other's switching behaviors (Nitzan and Libai, 2011). Nitzan's study in 2011 found that exposure to a defecting neighbor is associated with an 80 per cent increase in the defection hazard (Nitzan and Libai, 2011).…”

“…Highly connected customers are more affected by each other's switching behaviors (Nitzan and Libai, 2011). Nitzan's study in 2011 found that exposure to a defecting neighbor is associated with an 80 per cent increase in the defection hazard (Nitzan and Libai, 2011). Moreover, studies have shown that customers' purchasing decisions are influenced by their families, social groups and reference groups (Levy, 1966;Sheth, 1974;Nicosia and Mayer, 1976;Stafford and Cocanougher, 1977;Coleman, 1983).…”

“…Some studies have found that the social aspects of customers' relations have a sizeable impact on customer defection, and the inclusion of social variables increases the explaining power and predictive power of the customer defection model (Nitzan and Libai, 2011). More recently, researchers (Muniz and O'Guinn, 2001;McAlexander et al, 2002) have developed a commercial concept of communities whose primary bases of identification are either brands or consumption activities (Woisetschlager et al, 2010).…”

Impacto Da Distância Social Nas Transgressões Entre Empresas E Consumidores

“…Isso é um passo inicial para o desenvolvimento e implementação de estratégias de recuperação de falhas em serviços mais eficazes e menos onerosas (Nitzan & Libai, 2011). A contribuição gerencial mais relevante deste estudo é mostrar que a transgressão contra um consumidor e suas possíveis consequências são apenas uma parte do que realmente pode acontecer com a carteira de clientes da empresa.…”

“…De outro, a maioria dos trabalhos que tratam de transgressão no contexto de consumo e falhas de serviço não aborda a perspectiva do terceiro, mas apenas da vítima (Aaker et al, 2004;Fernandes & Santos, 2007;Silva & Lopes, 2014), ou, quando o faz, é em outros contextos que não o de consumo ou relacionamentos em marketing (Barnes, 2010). Ainda, os poucos estudos que consideram a perspectiva do terceiro no contexto de consumo abordam a falha em uma transação única, sem considerar a existência de relacionamento entre empresas e consumidores (Sridhar & Srinivasan, 2012), ou consideram a perspectiva do terceiro de maneira coletiva e com foco em apenas uma ou outra reação do consumidor, como o comportamento adequado ou inadequado de outros consumidores na experiência de consumo com a empresa (Miao & Matilla, 2013), ou a influência das redes sociais na intenção de troca de um provedor de serviços (Nitzan & Libai, 2011). Entretanto, tais estudos não analisam o quanto e em que condições a terceira parte (e seu relacionamento com a empresa) é influenciada pela transgressão da empresa a outro consumidor.…”