Locked in or Attracted by? The Interplay between Switching Costs and Alternative Attractiveness on Gen Y Satisfaction and Loyalty

Stephanie Hui-Wen Chuah1 and T. Ramayah1
1Universiti Sains MalaysiaPenang, Malaysia
hw.chuah@gmail.com, Ramayah@usm.my

Abstract: The relationship between customer satisfaction and loyalty has always been a research mystery. Generation Y is regarded as a priority market segment, which no business can afford to ignore. However, Gen Yers are known as the least satisfied and loyal customers, making it a challenge group to target. More than any other generations, Gen Yers are sensitive to incentives and costs and they are aware of viable alternatives in the marketplace. Thus, this study proposed and empirically tested an integrated model to examine the mediated moderating roles of switching costs (SC) and alternative attractiveness (AA) on the relationship between customer satisfaction and loyalty. Analysis of survey data from 417 Gen Y mobile users revealed some interesting findings. While satisfaction was a significant predictor of Gen Y loyalty, there existed some mediators and moderators in the relationship. Both SC and AA were proven to be partial mediators, whereas AA was proven to be a moderator. Further, it was found that the moderating effect of AA on the association between satisfaction and loyalty was contingent upon the mediating effect of SC. These findings offer novel and important implications for the theory and practice. Finally, the implications of these findings are delineated.

Keywords: Customer Satisfaction, Switching Costs, Alternative Attractiveness, Customer Loyalty, Generation Y, Mobile Telecommunications
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