Determinants of Customer Churn and Retention in the IT Industry: An Empirical Analysis
TL;DR
Investigation of the relationship between customer engagement, service quality and perception about pricing and customer churn and customer retention in the IT industry finds that customer engagement, service quality and pricing perception had a significant impact on customer retention whereas customer churn was insignificant.
Abstract
Customer retention has emerged as an important issue for information technology (IT) firms as customers are able to compare providers, services offered and price quotes rather easily. The current paper investigates the relationship between customer engagement, service quality and perception about pricing and customer churn and customer retention in the IT industry. The research is conducted based on primary data gathered through a structured survey in the form of a five-point Likert scale questionnaire and analyzed with SPSS software. In total, the sample size comprised 279 respondents after removing invalid observations. The reliability test showed the Cronbach’s Alpha of 0.982 for 40 items, which demonstrates extremely high reliability of data. According to descriptive statistics, the sample expressed positive attitudes towards customer engagement, service quality and pricing, as well as strong intentions to retain their business with the IT company. Pearson correlations among five research variables ranged from 0.909 to 0.935 and were statistically significant at p < 0.001. Multiple regression found that customer engagement (β = 0.205), service quality (β = 0.401) and pricing perception (β = 0.256) had a significant impact on customer retention whereas customer churn was insignificant (p = 0.062). The model explained 89.8% of the variance in customer retention.
