Why customers stay: reasons and consequences of inertia in financial services

Abstract

This research investigates inertia in a financial services context, with particular focus on the reasons for consumers' dissatisfaction and inert behaviour, and studies the customers' complaining behaviours and past and future inertia. The study utilised a two part methodology, including both qualitative and quantitative research. Twenty indepth interviews provided the preliminary data required for developing a questionnaire which was subsequently completed by 410 respondents. Determinants of dissatisfaction included the number and size of account fees, whilst determinants of inertia were the perception of similarity between financial institutions and the complexity, costs and time inherent in switching. Factors differentiating future inertia and future active customers included the type of account, length of time the account had been held, membership of a number of financial institutions, income and level of consideration giving given to changing financial institution. KeywordsInertia, financial services, business-to-consumer Why Customers Stay? Reasons and Consequences of Inertia in Financial Services AbstractThis research investigates inertia in a financial services context, with particular focus on the reasons for consumers' dissatisfaction and inert behaviour, and studies the customers' complaining behaviours and past and future inertia. The study utilised a two part methodology, including both qualitative and quantitative research. Twenty indepth interviews provided the preliminary data required for developing a questionnaire which was subsequently completed by 410 respondents. Determinants of dissatisfaction included the number and size of account fees, whilst determinants of inertia were the perception of similarity between financial institutions and the complexity, costs and time inherent in switching. Factors differentiating future inertia and future active customers included the type of account, length of time the account had been held, membership of a number of financial institutions, income and level of consideration giving given to changing financial institution.

Hizmet Kalite Algısının Müşteri Şikayet Etme Niyeti Üzerindeki Etkisi: Bankacılık Sektöründe Bir Araştırma - The Effect of Service Quality Perceptions On Consumers Complaint Intentions: A Study in Banking Sector

“…73-74). White and Yanamandram (2004) in their study conducted in Australia, conclude that customer complaints vary according to three variables: type of account, duration of dissatisfaction, and gender. In another study conducted in India regarding the banking sector, four types of customer profiles concerning attitude towards complaints have been identified (Siddiqui & Tripathi, 2010, p. 119).…”

Customer Retention Management Strategies in Freight Transport Service Industry in Ghana.

“…Conversely, White, and Yanamandram (2004), contend that a firm with a high switching barriers and poor service quality is likely to generate negative attitudes, and damaging word of mouth communications. RECOMMENDATION It is recommended also that the freight transport service firms in Ghana can benchmark what is evidenced in many other service firms with inherent natural switching costs (e.g.…”

“…Practically, also, switching costs can be created by freight transport service firms in Ghana by introducing and implementing contractual penalties for switching, such as the transfer fees levied by some brokerage firms for moving shares and bonds to another financial institution. However, White and Yanamandram (2004) caution that firms need to be cautious so that they are not perceived as holding their customers hostage.…”

A model of customer retention of dissatisfied business services customers

“…• switching costs (Burnham et al, 2003;Colgate and Lang, 2001;Fornell, 1992;Grace and O'Cass, 2003;Gronhaug and Gilly, 1991;Jones et al, 2000;Jones et al, 2002;Kim et al, 2004;Lee and Cunningham, 2001;Panther and Farquhar, 2004;Patterson, 2004;Patterson and Smith, 2003;Sharma and Patterson, 2000); • interpersonal relationships (Colgate and Danaher, 2000;Colgate and Lang, 2001;Gwinner et al, 1998;Jones et al, 2000;Kim et al, 2004;Patterson, 2004;Patterson and Smith, 2003); • availability and attractiveness of alternatives (Bendapudi and Berry, 1997;Colgate and Lang, 2001;Grace and O'Cass, 2003;Jones et al, 2000;Kim et al, 2004;Panther and Farquhar, 2004;Patterson and Smith, 2003;Sharma and Patterson, 2000); • service recovery (Blodgett et al, 1997;Hess et al, 2003;Smith et al, 1999;Smith and Bolton, 1998;Spreng et al, 1995;Tax et al, 1998); and • inertia (Bawa, 1990;Colgate and Lang, 2001;Ranaweera and Neely, 2003;White and Yanamandram, 2004).…”

“…It is common for customers to be dissatisfied with the relationship they have with their service providers (Colgate and Lang, 2001;Colgate and Norris, 2001;Gronhaug and Gilly, 1991;White and Yanamandram, 2004), but how customers react to dissatisfaction is the crucial issue for marketing managers (Richins, 1987). Just as satisfied customers are not necessarily loyal (Rowley and Dawes, 2000), dissatisfied customers are not always disloyal (Hirschman, 1970).…”