The effect of switching costs on customer retention: the mobile telecom industry in Lebanon

Abstract

The purpose of this paper is to investigate the strategic impact of the switching costs on customer retention in the Lebanese telecommunication market. Few studies have evaluated the impact of the switching costs on customer retention and none has tackled the Lebanese market. A quantitative method using a questionnaire technique was used to probe the Lebanese mobile phone subscribers. The outcome of this research suggests that the switching costs are able to explain third of customer retention, also, there is a moderate positive relation between customer retention and the switching costs. If the number portability service was introduced in Lebanon or in case this sector was privatized, it will be very interesting to re-evaluate the outcome of this paper. Managers can design customer retention strategies including well-tailored switching costs structure to retain their customer base, which shall increase/maintain their revenues and reduce their operating costs, thus increase bottom-line financial figures.