The Effect of Switching Barriers Types on Customer Loyalty

Abstract

Several studies have focused on the influence of switching barriers on customer loyalty, but there has been no consensus on their findings. This paper proposes that the mixed conclusions are due to there being two types of switching barriers - rewarding and punitive - and two types of customer loyalty - attitudinal and behavioral. The direction and strength of the association between switching barriers and customer loyalty depends on the type of switching barriers and the type of loyalty being considered. Using a sample of dissatisfied customers in an emerging economy, Chile, this paper shows that the more rewarding switching barrier dimensions are positively related to the loyalty of dissatisfied retail banking customers and that the punitive ones are negatively related to loyalty. The investigation also shows that the influence of switching barriers is greater for behavioral loyalty rather than attitudinal loyalty, particularly when dealing with punitive switching barriers. These findings may allow banks to devise mechanisms that have a positive effect on customer retention and loyalty and enhance the banks' bottom line.