Consumer switching costs: A typology,antecedents, and consequences

The management of customer switching costs has been hampered by the lack of a comprehensive typology for conceptualizing, categorizing, and measuring consumers' perceptions of these costs. This research develops a switching cost typology that identifies three types of switching costs: (1) procedural switching costs, primarily involving the loss of time and effort; (2) financial switching costs, involving the loss of financially quantifiable resources; and (3) relational switching costs, involving psychological or emotional discomfort due to the loss of identity and the breaking of bonds. The research then examines the antecedents and consequences of switching costs. The results suggest that consumers' perceptions of product complexity and provider heterogeneity, their breadth of product use, and their alternative provider and switching experience drive the switching costs they perceive. Furthermore, all three switching cost types significantly influence consumers' intentions to stay with their current service provider, explaining more variance than does satisfaction. In view of the potential importance of switching costs, the impact of all strategic moves on switching costs should be considered Michael Porter (1980:122). Thomas A. Burnham (Tburnham@scu.edu) (Ph.D., University of Texas) is an assistant professor of marketing in the Leavey School of Business at Santa Clara University. His research investigates the strategic management of consumer switching costs and the use of customer suggestions in product improvement. Prior to obtaining his doctorate, he developed strategic reports and budgets for MCI Telecommunications and consulted with the management of a cooperative in Paraguay as a U.S. Peace Corps volunteer. Judy K. Frels (Jfrels@rhsmith.umd.edu) (Ph.D., University of Texas) is an assistant professor of marketing in the Robert H. Smith School of Business at the University of Maryland. Her research focuses on the marketing of high-technology products, innovation adoption, and consumer switching costs. Prior to obtaining her Ph.D., she spent 10 years developing operating systems and compilers, as well as managing and marketing software and hardware products at IBM and at Tymlabs Corporation. She has consulted with firms including SAIC, Imation, Input-Output, Inc., and the University of Arkansas for Medical Sciences. Vijay Mahajan (Vmahajan@mail.utexas.edu) is John P. Harbin Centennial Chair in Business, McCombs School of Business, University of Texas at Austin. He is currently serving as dean of the Indian school of Management, Hyderabad, India. He has published extensively on innovation diffusion, new product development, and strategic marketing.