Factors Affecting Switching

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Journal of Economic & Administrative Sciences

Vol. 26, No. 1, June 2010 (27 -51)

Factors Affecting Switching Behavior of Mobile Service Users: The Case of Jordan Dr. Mohammad Suleiman Awwad Mr. Bashar Awad Neimat Mutah University Al-Hussein Bin Talal University Jordan Abstract This study aims at identifying the most critical factors affecting the customer switching behavior for mobile service providers in Jordan. A number of 580 questionnaires distributed to a random sample of Jordanian mobile users. The questionnaire contains 33 items measured on a five-point likert scale. The data were analyzed using regression analysis. It was found that all the independent variables (pricing, inconvenience, core service failures, service encounter failures, employee responsiveness to service failures, attraction by competitors, changes in technology, switching cost) had a significant effect on switching behavior of mobile service users except change in technology and employee responsiveness to service failure. Recommendations and directions for future research are proposed. Introduction Competition in the wireless telecommunication industries has grown at an unprecedented rate in the past several years. The growth of the wireless telecommunications market is due not only to the greater number of subscribers but also to the greater variety of services that are now offered. In the early stages of market growth, the emphasis was on acquiring new subscribers, but now as the market matures, the significance of retaining current customers increase drastically. Attracting new customers is more difficult and expensive than retaining existing customers, this is partly because service providers acquire considerable information about existing customers and can analyze this valuable information to understand their preferences and behavior (Brown, 2004). In addition, in a mature market, acquiring new subscribers often means taking them away from other service providers, which requires more incentives to make those customers

Dr. Mohammad Suleiman Awwad, Mr. Bashar AwadNeimatJune 2010

switch. Based on this evidence, it makes more sense financially for an organization to focus on retaining its existing customers. The literature has shown that the longer customers stay in relationship with the company, the more value the company generate (Reichheld, 1996), so the period of time a relationship is maintained is one of fundamental factors determining the value that the customers provide to the firm (Berger and Nasr, 1998). Customer switching behavior is consequently a serious threat or opportunity to the achievement of long-term relationship (Ganesh et al., 2000). Hence firms need to study carefully the processes determining customer switching decisions if they are willing to manage their customer bases successfully (Bansal et al., 2005). Jordan has seen a boom in the wireless communication market over the last few years. This increase in demand has led to increase competition in the industry. For example, Jordan has currently four service providers competing for market share. This increased competition has resulted in more choice and better value for the customers as companies are trying to attract clients through competitive offers. Motivated by a need for mobility and lowered costs of owning a mobile phone, a growing trend among customers is to use their mobile phones as their primary phone. In spite of its gaining popularity, the mobile industry appears to have its fair share of problems such as dropped calls, billing errors, and a multitude of calling plans which make this service very challenging for customers, resulting in dissatisfaction and possible switching behavior. The biggest challenge faced by this industry is the process of leaving one Mobile phone provider for another. Therefore, losing a customer is a serious setback for the firm in terms of its present and future earnings. In addition to losing the benefits, the firm needs...
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