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J·BJon BishopIndependent growth marketer

Retention · Empirical implementation of a random-utility approach to measure switching costs and brand loyalty, followed by analysis of how usage, service design, and firm and individual characteristics relate to switching and retention.

Measuring Switching Costs and the Determinants of Customer Retention in Internet-Enabled Businesses: A Study of the Online Brokerage Industry

Information Systems Research · 2002

Pei-Yu (Sharon) Chen, Lorin M. Hitt

Summary

Measured switching costs varied substantially (up to a factor of two). Demographics had little effect, while systems usage and quality were associated with reduced switching; product-line breadth and quality could reduce switching and attrition.

For your marketing

Possible founder application

Use it to frame a lifecycle hypothesis and define customer-level outcomes; compare its market and retention horizon with yours.

Reported result

What the study found

Measured switching costs varied substantially (up to a factor of two). Demographics had little effect, while systems usage and quality were associated with reduced switching; product-line breadth and quality could reduce switching and attrition.

Research question

What the authors investigated

How large are switching costs and brand loyalty for online service providers, and which usage, service-design, firm, and individual factors determine switching and retention?

Design

Empirical implementation of a random-utility approach to measure switching costs and brand loyalty, followed by analysis of how usage, service design, and firm and individual characteristics relate to switching and retention.

Sample and setting

The online brokerage industry; the publisher page reports data from that industry and evaluates systems usage, systems quality, product-line breadth and quality, and customer demographics.

Scope and transfer

Limitations to keep in view

Not stated on the publisher article page's abstract; the page identifies online brokerage as the empirical context, so transferability to other Internet-enabled businesses is not established there (scope caveat).

Research sources

The publisher abstract says the authors implement a random-utility approach using online-brokerage data and find up to twofold variation in switching costs, little demographic effect, and reduced switching associated with usage, systems quality, and firm product breadth/quality. Direct publisher-page retrieval was recorded on 2026-10-09; profile summarizes the accessible record and does not claim independent review of inaccessible full text.

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