Customer Tenure, Recommendation and Switching

Abstract

In relationship marketing, the circumstances under which customers recommend services to others are of major importance. A report is presented of an exploratory study of two services, which addressed three questions related to recommendations: 1. How voluntary were the service switches? 2. What proportion of the switches was based on recommendation? 3. Did recommendation rates decline or increase with the duration of customer tenure? It was found that a substantial proportion of switching arose in circumstances over which respondents had little control. When switching was voluntary the main reason given for the choice of a new supplier was recommendation. The rate of recommendation of the current supplier declined with the duration of customer tenure for both services. This last finding suggests that recently acquired customers may have been undervalued in relationship marketing.