“Let’s Wait and See!” – The Real Option to Switch as a New Element of Customer Value

Jörg Henseler, Ellen Roemer

Research output: Contribution to journalArticleAcademic

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Abstract

We suggest that a customer’s option to switch suppliers, and to wait and see before switching, adds to customer value in uncertain markets, and affects the customer’s switching behavior. We use a real options model to examine the value of this option and conduct sensitivity analyses based on data collected from the German public health insurance market to support our argument. We elaborate on the customer value construct and show how it contributes to customers’ behavioral loyalty. We also provide guidelines for managers of in-suppliers and out-suppliers on how to use the value of customers’ option to switch, e.g., for pricing decisions and management of customer churn
Original languageEnglish
Pages (from-to)112-136
JournalSchmalenbach Business Review - (sbr)
Volume65
Issue number2
DOIs
Publication statusPublished - 2013
Externally publishedYes

Keywords

  • Customer loyalty
  • Customer relationships
  • Customer value
  • Real options
  • Switching behavior
  • Uncertainty

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