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

Abstract

Purpose -- The purpose of this paper is to explore the structure of switching costs in the Lebanese telecommunication market and investigate its impact on the customer retention taking into consideration the customer attributes that might impact these constructs. Design/methodology/approach -- A post- positivist philosophical position and a deductive reasoning approach were adopted through this research. A mixed method was implemented including a qualitative study using a semi-structured interview technique on one of the two telecommunication operators in Lebanon in order to facilitate a qualitative method using a questionnaire technique to probe the second population that represents the Lebanese mobile phone subscribers. Findings -- The switching costs are able to explain third of customer retention in the Lebanese telecommunication market. There is a moderate positive relation between customer retention and the switching costs that are composed mainly of relational switching costs towards the operator and the mobile number, followed by the fees to be paid upon buying a new subscription from the other operators. This moderate association can be due to the lack of competition in this market in Lebanon owned completely by the Lebanese government and managed by two operators sharing the market equally and offering the same products, services, network coverage and technologies. Females tend to be more attached to their operator and educated customer showed a higher retention levels. Research limitations/implications -- The qualitative research surveyed top managers in one of the two telecommunication operators in the Lebanese market, it may be interesting to check the point-of-view of the other operator as well. 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.