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Journal of Service Research
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Understanding Customer Switching Behavior in a Liberalizing Service Market

An Exploratory Study

Jaap E. Wieringa

University of Groningen

Peter C. Verhoef

University of Groningen

In recent decades, many service markets have been liberalized, which means incumbent service firms face new competitors and must address customer switching—which from a public policy perspective, is necessary to ensure that liberalization succeeds. In this article, the authors conduct an exploratory study in which they investigate determinants of customer switching in the liberalizing Dutch energy market. Their results suggest that relationship quality, switching costs, and current demand for products and services from the energy supplier (e.g., usage rate, number of contracts) represent important determinants for all customers. In a subsequent analysis that accounts for customer heterogeneity, the results indicate a large inertia segment (71%) but a relatively small (6%) disloyal segment. The authors discuss implications for both incumbent service firms (former monopolists) and public policy officials.

Key Words: customer loyalty • customer relationships • liberalizing markets • public policy • energy market • switching costs • latent class analysis • logit model

Journal of Service Research, Vol. 10, No. 2, 174-186 (2007)
DOI: 10.1177/1094670507306686
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Y. Polo and F. J. Sese
How to Make Switching Costly: The Role of Marketing and Relationship Characteristics
Journal of Service Research, November 1, 2009; 12(2): 119 - 137.
[Abstract] [PDF]