Switching Costs and Customer Loyalty: A Review of literature

Abstract

Retaining customers in a competitive-value driven era is seen as a herculean task. Retaining customers for a longer time and reaping the benefit of customer lifetime value is seen as a major business activity that has a manifold influence on profitability, customer base, share of wallet, free word of mouth besides customer suggestions and feedback. In this direction, switching costs play an important role in influencing the customer loyalty. Switching cost acts as switching barrier which forces the customer to remain with the existing company and strengthens the customer-company longevity relationship. In view of the growing importance of switching costs and its influence on customer loyalty, this paper attempts to review switching costs and customer loyalty with a view to make switching costs barrier an effective tool to maintain a loyal customer base.