Customer retention when the customer's future usage is uncertain

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Abstract

Consumers are often uncertain about how much they will use a service in the future (e.g., health clubs, credit cards, cell phones), yet the effects of this uncertainty on customer retention have not been studied. This research investigates factors influencing consumers' decisions about whether to retain noncontractual services for which anticipated future usage levels are uncertain. The studies show that Future Usage Uncertainty (FUU) generally reduces the likelihood that a customer will continue in a service relationship. However, when consumers consider the flexibility they have to delay the keep/drop decision (i.e., drop flexibility), or the anticipated regret associated with making the wrong decision, the effects of FUU are essentially eliminated, and consumers are more likely to continue in the relationship. © 2007 Wiley Periodicals, Inc.

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