Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

BACKGROUND 
Depending on the focus of study, consumer switching can be perceived both, as an independent as well as a 
dependent variable influencing and being influenced by several factors within the system. Due to this dual property, 
consumer switching can be a major cause of changes to a firm in several ways. Foremost, a firm’s number of 
customers can reduce, and drastically so due to consumers switching to other service providers (referred to as 
“out-
switching”
) or may increase due to 
“in-switching”
(gaining customers from other firms). In fact, according to 
Reichheld and Teal (2001), consumer switching is recognized as one of the most important factors in firms’ viability 
and customer retention.
Previous studies in consumer research have indicated that switching is selective (see Keaveney, 1995; 
Bansal et al., 2005). Thus, consumer switching is influenced by variables such as age, sex or socio-economic 
attributes. The implication is that, consumer switching can significantly influence, if not determine the demographic 
and socio-economic composition of a firm’s customers. Furthermore, consumer switching can be a source of a 
firm’s re-evaluation of its strengths and weaknesses. In addition, consumer switching can be an agent of initiation of 
new skills, ideas, and values, within a firm. For these reasons, switching should be viewed as a dual process: a 
response to various changes and equally, a catalyst to change for those firms that gain or lose consumers.

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