Determinants of subscriber churn and customer loyalty in the Korean mobile telephony market

Abstract

By using a binomial logit model based on a survey of 973 mobile users in Korea, the determinants of subscriber churn and customer loyalty are identified in the Korean mobile telephony market. The probability that a subscriber will switch carrier is dependent on the level of satisfaction with alternative-specific service attributes including call quality, tariff level, handsets, brand image, as well as income, and subscription duration. However, only factors such as call quality, handset type, and brand image affect customer loyalty as measured by the intention/non-intention to recommend the service provider to other people. The insignificance of subscription duration in affecting the loyalty-induced action indicates that lock-in effects are likely to be concentrated among the "spuriously loyal" customers who are not willing to churn just because of switching costs. These findings provide implications for the mobile business as well as competition policies for the mobile telephony market. (C) 2004 Elsevier Ltd. All rights reserved.