Relating Switching Costs to Positive and Negative Word-of-Mouth

Abstract

Scholars typically cast switching costs as entrapments that deter customers from exiting, thereby provoking harmful word-of-mouth. In this article we expand this restricted view by arguing that switching costs relate differently to positive word-of-mouth (PWOM) and negative word-of-mouth (NWOM), depending on the combinations of switching costs and switching intentions. The findings of our research reinforce studies that suggest switching costs impede switching intentions. However, PWOM increases and NWOM decreases with increasing switching costs. Segregating by customer segments, calculative customers who intend to stay but not because high switching costs hinder switching, give the strongest PWOM and have the most PWOM givers. Captive customers entrapped by high switching costs give strong NWOM and have high numbers of NWOM givers. While both segments perceive low switching costs, committed customers with low switching intentions give stronger PWOM than disloyal customers do. Likewise, disloyal customers with high switching intentions give stronger NWOM than committed customers do. There are also more (less) PWOM (NWOM) givers with committed than with disloyal customers. This article offers a framework to explain the complex relationships among switching costs, switching intentions, and WOM. The findings should help firms to understand switching costs' roles in retaining customers, identify and harness PWOM supporters, and minimize damages with NWOM distracters.