Switching Costs and Loyalty: Understanding How Trust Moderates Online Consumers’ Ties to Merchants
Abstract
Information technology has transformed how travelers interact with travel service providers. Due to fierce competition in the online air travel industry, e-ticketing services have focused attention on fostering customer loyalty. This is an important strategy because, in general, initial transactions with new customers are less profitable than transactions with existing customers. Drawing on research on customer loyalty, switching costs, and trust, this study develops, and proposes an empirical test, for a model incorporating trust as a moderator of the relationship between switching costs and online customer loyalty. We propose that in the presence of high customer trust, e-businesses should have less need to rely on switching costs as a driver of customer loyalty. If supported, this proposition will extend understanding of customer loyalty, switching costs, and trust in e-commerce environments and provide practical, theory-driven, guidelines to e-businesses seeking to develop customer loyalty programs.
