Why On-line Customers Remain with a Particular E-retailer: An Integrative Model and Empirical Evidence

Hsien-Tung Tsai
National Taiwan University

Heng-Chiang Huang
National Taiwan University

Yi-Long Jaw
National Taiwan University

Wen-Kuo Chen
National Taiwan University

ABSTRACT
This article formulates and empirically tests a conceptual framework that considers the antecedents of switching barriers and overall satisfaction, and their roles as drivers of customer retention in on-line settings. To test the proposed hypotheses, structural equation modeling based on data obtained from a large on-line retailing store in Taiwan is used. The results suggest that perceived switching costs and community building exert the greatest impact on repurchase intentions through switching barriers and overall satisfaction. Furthermore, relational orientations significantly moderate the link between switching barriers and repurchase intentions. Finally, the theoretical and practical implications of the findings are discussed. 2006 Wiley Periodicals, Inc.
Psychology & Marketing, Vol. 23(5): 447464 (May 2006) Published online in Wiley InterScience (www.interscience.wiley.com) 2006 Wiley Periodicals, Inc. DOI: 10.1002/mar.20121 447

Business-to-consumer (B2C) electronic commerce has proven to be a promising channel of choice for consumers (Devaraj, Fan, & Kohli, 2002). According to Jupiter Researchs (2004) report, on-line retail sales reached US$65 billion in the United States last year, and are expected to grow by a compound annual rate of 17% in the future. A recent MIC (Market Intelligence Center, 2004) survey indicates that more than 78% of Internet users in Taiwan purchased products or services on-line in 2003, relative to 51% in 2001. This trend indicates remarkable potential and demonstrates that electronic commerce constitutes an alternative to traditional brick-and-mortar shopping channels (Pavlou & Gefen, 2004). Even so, the Harris and Goode (2004) study of on-line buyerseller relationships established that attracting new on-line customers and retaining existing ones is not easy. Indeed, in recent years, both academicians and practitioners have paid increased attention to the issue of on-line customer retention. This focus is essential, because not only is the cost of retaining existing customers less than that of acquiring new ones, but also existing customers cost less to maintain than newly acquired ones (Lam, Shankar, Erramilli, & Murthy, 2004; Reichheld, 1996). Lam et al. (2004) even argue that customer retention has a powerful impact on the performance of service firms and is considered by many service firms as an important source of competitive advantage (p. 293). With respect to the determinants of customer retention, the literature suggests that customers are motivated to remain with a particular provider by constraint-based drivers (because they need to) or desirebased drivers (because they want to) (e.g., Bansal, Irving, & Taylor, 2004; Bendapudi & Berry, 1997; Burnham, Frels, & Mahajan, 2003; Jones, Mothersbaugh, & Beatty, 2000; Wathne, Biong, & Heide, 2001). Although there is an abundance of related research in the brick-and-mortar context, the limited studies so far conducted in an on-line context have conceptualized on-line customer loyalty in terms of overall satisfaction and investigated the antecedents that lead to the creation of strategies. In this study, we propose and empirically analyze a conceptual framework that considers switching barriers and overall satisfaction as the drivers of customer retention and their antecedents in an online context. In particular, expected value sharing that focuses on future, rather than past, evaluations of a providers potential performance is incorporated into the framework, and serves as one of the antecedents of switching barriers. Also examined is the role played by relational orientations in the customer-retention process. It is well recognized that customer retention drivers serve different purposes for different customers, depending on whether they have high or low relational bonds with a particular provider (Garbarino & Johnson, 1999; Jackson, 1985). More specifically, given that building and maintaining retention drivers involves various kinds of investment, an understanding of the roles the two drivers play in the retention process is essential if providers are to make appropriate resource allocation decisions. In other words, if
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the drivers for low and high relational orientation customers could be differentiated, service providers would be able to make better resource allocation decisions.

CONCEPTUAL FRAMEWORK AND HYPOTHESIS DEVELOPMENT Based on relationship marketing and consumer behavior research, this study developed the conceptual framework shown in Figure 1. According to the literature, customers are motivated to remain with a particular service provider by constraint-based determinants (switching barriers) and desire-based determinants (overall satisfaction) (Bansal et al., 2004; Benapudi & Berry, 1997; Burnham et al., 2003; Jones et al., 2000). Given the possibility that the strength of the links between the drivers and customers repurchase intentions may be influenced by customer relational orientations (Garbarino & Johnson, 1999), this study follows previous research by identifying two types of relational orientation and analyzing their effects. The next section focuses on the antecedents of switching barriers and overall satisfaction, and elucidates the roles they play in predicting the future intentions of on-line customers to remain with a particular e-retailer.

Figure 1. Conceptual framework.

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449

Antecedents of the Two Drivers Expected Value Sharing. Expected value sharing is defined as the extent to which customers perceive that tangible economic benefits will be shared by a service provider in the future. The more positive customers expectations of future value sharing, the more they are psychologically locked in to the relationship with the provider. This future orientation recognizes that customer behavior is driven by anticipated future outcomes. When a customer expects future value-sharing opportunities, there is an interest in maintaining a sound long-term relationship with a particular service provider. Essentially, expected value sharing is a way for providers to use sharing patterns as a sign of good faith. By establishing such incentives, providers offer tangible evidence that they are willing to lower their profits to benefit customers (Heide & Miner, 1992; Lemon, White, & Winer, 2002). Also, by remaining with an e-retailer, customers become claimants of benefits and are therefore entitled to reap accumulated value in the future. Thus, the following hypothesis is proposed:
H1: Expected value sharing has a positive influence on switching barriers.

Perceived Switching Costs. According to Porter (1980), switching costs are one-off costs involved in changing from one service provider to another. As perceived switching costs increase, consumers are more likely to feel that it is difficult to switch from a current provider to a new one. In the on-line shopping environment, perceived switching costs include setup costs, learning costs, and highly personalized services (Chen & Hitt, 2002). For example, e-retailers are increasingly able to adapt their customer interface and services to specific needs through personalized services so that customers may be psychologically committed to an e-retailer. Moreover, setup costs include the time and effort associated with the process of initiating a relationship with a new e-retailer, such as customers providing personal information on-line when they first use the service (Burnham, Frels, & Mahajan, 2003). Based on organizational behavior literature, Bansal, Irving, and Taylor (2004) argue that continuance commitment (similar to switching barriers in this study) is associated with the perceived switching costs. Therefore, the following hypothesis is advanced: H2: Perceived switching costs have a positive influence on switching barriers. Community Building. A community is comprised of its participants and the relationships among them (McAlexander, Schouten, & Koening, 2002). More recently, researchers (e.g., McAlexander et al., 2002; Muniz & OGuinn, 2001) have developed a commercial concept of communities whose primary bases of identification are either brands or consumption
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activities. In other words, the communities represent a form of association within a consumption context positioned around one product or service. This article uses a general concept that includes both a face-to-face community and an on-line community, situated within a consumption context and positioned around the same e-retailer. Through these marketplace communities, customers can share meaningful consumption experiences that enhance mutual appreciation of the on-line service provider (McAlexander et al., 2002). More important, communities allow and encourage communication between all those involved, that is, online customers, suppliers, and other parties interested in a particular community. In other words, community building enhances mutual satisfaction, because members of a community can share their experiences and their expectations. Furthermore, in the study of customer relationship management, Muniz and OGuinn (2001) suggested that businesses in both on-line and off-line environments can build a community that makes it more difficult for a customer to leave the family of people who purchase from the company. At the same time, they found that by sharing interests and expertise within a consumption context, participants feel more secure in their awareness that there are many like-minded others out there, which increases the uncertainty and cost of thinking associated with switching providers. From another point of view, frequent interactions in a community could lead to the development of consumption-focused interpersonal bonds (McAlexander et al., 2002). It is assumed that these embedded relationship properties create exit barriers as customers realize that valued interpersonal relationships would be lost if they were to switch to alternative providers (Wathne, Biong, & Heide, 2001). Therefore, the following hypotheses are proposed: H3(a): Community building has a positive influence on switching barriers. H3(b): Community building has a positive influence on overall satisfaction. Perceived Service Quality. Service quality is often seen as one of the key determinants of on-line retailers success (Devaraj et al., 2002; Harris & Goode, 2004; Parasuraman, Zeithaml, & Malhotra, 2005). Recently, a number of researchers have attempted to identify the key service-quality attributes that best conform to the on-line business environment. For example, Parasuraman et al. (2005) developed E-S-QUAL to measure overall on-line service quality. In studying on-line consumer loyalty, Harris and Goode (2004) measured service quality as a unidimensional concept. Meanwhile, they argued that perceptions of service quality could positively influence overall customer satisfaction. As Oliver (1999) suggests, perceived service quality is cognitive and precedes overall satisfaction,
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which is an affective response. Devaraj et al. (2002) found that perceived service quality in on-line environments has a significant impact on overall satisfaction similar to that in conventional off-line contexts. This finding is consistent with the argument (e.g., Chiou, Droge, & Hanvanich, 2002) that overall satisfaction is an emotional response, whereas perceived service quality is an appraisal construct, and appraisal generally comes before emotional response. The above discussion leads to the next hypothesis. H4: Perceived service quality has a positive influence on overall satisfaction. Perceived Trust. Trust has been conceptualized by previous researchers in a variety of ways, both theoretically and operationally (Gefen, Karahanna, & Straub, 2003). Singh and Sirdeshmukh (2000) distinguished between trust before initiation of an exchange episode (pretrust) and after an exchange (post-trust). This study focuses on pre-trust in order to be consistent with the concept of trust. Schurr and Ozanne (1985) define trust as the belief that a partys word or promise is reliable and that the party will fulfill his/her obligations in an exchange relationship (p. 940). Researchers (e.g., Chiou, 2004; Harris & Goode, 2004) working in the area of on-line buyerseller relationships have found that perceived trust significantly affects overall satisfaction. This finding is consistent with the Singh and Sirdeshmukh (2000) argument that consumers trust evaluations before a specific exchange episode will have a direct influence on their post purchase satisfaction (p. 159). Similarly, Chiou (2004) also found that on-line customers prefer to do business with service providers they believe they can trust. More important, trust in ones exchange partner mitigates or removes the hazards of opportunistic behavior, and thus increases exchange satisfaction. Hence, the following hypothesis is posited: H5: Perceived trust has a positive influence on overall satisfaction. The Two Main Drivers of Customer Retention Switching Barriers. Switching barriers are defined as the degree to which customers experience a sense of being locked into a relationship based on the economic, social, or psychological costs associated with leaving a particular service provider (Allen & Meyer, 1990; Bendapudi & Berry, 1997). Similarly, Bansal, Irving, & Taylor (2004) use the term continuance commitment as a measure of the extent to which a buyer is psychologically bonded to a seller. Switching barriers help service providers prevent switching if there is a negative situation, such as a temporary decline in service quality. The barriers allow time for the provider to rebuild the higher satisfaction levels before the incident (Burnham et
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al., 2003). Furthermore, Wathne et al. (2001) indicate that customers may derive utility from the customer-service provider relationship, which serves as a switching barrier. Thus, switching to an alternative service provider means sacrificing utility from the existing relationship (Wathne et al., 2001). In other words, switching barriers act as disincentives that customers would rather not incur (Burnham et al., 2003), even if a new potential service provider offers more favorable prices or other benefits. On the basis of the above arguments and evidence, the following hypothesis is proposed: H6: Switching barriers have a positive influence on repurchase intentions. Overall Satisfaction. Overall satisfaction can be defined as a positive affective state resulting from a global evaluation of performance based on overall previous purchasing and consumption experiences with a particular product or service over time (E. W. Anderson & Fornell, 1994; Lam et al., 2004). Longitudinal and cross-sectional studies have demonstrated that satisfied customers are more likely to continue patronizing a particular service provider than dissatisfied ones (e.g., Crosby & Stephens, 1987; Gilly & Gelb, 1982; Oliver, Rust, & Varki, 1997; Szymanski & Henard, 2001). Similarly, in the case of online e-retailing services, researchers (e.g., Chiou, 2004; Devaraj et al., 2002; Szymanski & Hise, 2000) have found that the overall satisfaction experienced by online customers reduces the perceived benefits of switching service providers, and thus yields stronger repurchase intentions. A large body of evidence from e-commerce contexts supports the notion that higher levels of overall customer satisfaction generate higher levels of loyalty (e.g., R. E. Anderson & Srinivasan 2003; Chiou, 2004; Devaraj et al., 2002). Thus, the following hypothesis is proposed: H7: Overall satisfaction has a positive influence on repurchase intentions. Moderating Effects of Relational Orientations A substantial body of marketing research emphasizes the importance of a transaction/relational continuum (Garbarino & Johnson, 1999; Jackson, 1985). High relational orientation customers focus on creating a series of sequential, rather than individual, purchases and on establishing longterm interactive relationships with the seller (Garbarino & Johnson, 1999). On-line customers with a high relational orientation tend to have values that focus on the future. Because such customers anticipate that a relationship will continue, they invest time and money in a variety of product types, features, and functions only offered by their particular service provider. In other words, they lock themselves into the relationWHY ONLINE CUSTOMERS REMAIN Psychology & Marketing DOI: 10.1002/mar 453

ship. Hence, there is sometimes an obligation for high relational orientation customers to continue with a particular provider. In contrast, customers with a low relational orientation focus on creating individual transactions. Macneil (1980) suggested that transactional exchanges are discrete buyerseller exchanges of a commodity or performance for money, and involve limited communication, nonuniqueness in personal terms, and no anticipation of future exchanges. In other words, transactional-type customers base their decisions solely on rational economic and practical criteria; therefore, they have low levels of specific commitment and do not feel locked in. These arguments suggest the following hypotheses: H8(a): The effect of switching barriers on repurchase intentions is stronger for high relational orientation customers than for low relational orientation customers. H8(b): The effect of overall satisfaction on repurchase intentions is stronger for high relational orientation customers than for low relational orientation customers.

RESEARCH METHOD Sampling and Data Collection Procedures Data were collected from a survey of on-line customers of ETMall, a well known e-retailer in Taiwan. A Web-based survey was used for this study, which is more effective for qualifying potential participants as appropriate subjects (Szymanski & Hise, 2000). The on-line version of the questionnaire was set up on a survey portal provided by Chunghwa Telecom and introduced to 1,750 on-line customers selected randomly from ETMalls mailing list. A total of 526 respondents participated in the survey, with 21 incomplete responses, yielding a usable response rate of 29%. The usable surveys were obtained in roughly equal proportions from men and women, and the respondents were well educated, with about 93% holding a college degree or higher. The customer base was divided into four relational orientation groups according to their relational orientation composite scores. Following Garbarino and Johnson (1999), the customer base was segmented according to the length of time between purchases by each respondent. Customers who bought from ETMall three times per month on average were considered high frequency, and those who purchased only once every 3 months were considered low frequency. Two additional questions were also developed: Have you ever bought insurance through ETMall? and How many times have you bought from the other channels of Eastern Multimedia Group? The responses to these additional questions yielded useful information about the level of commitment to ETMall. The relational orientation composite score of each customer was calculated and used
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to differentiate customers. In this analysis, customers with higher scores are regarded as relational customers (n 118), and those with lower scores as transactional customers (n 117). Variable Measurement All the focal constructs of the model were measured using multiple items based on validated scales obtained from the literature, and all the items were assessed via a 7-point interval scale ranging from strongly disagree to strongly agree. As suggested by Heide and Miner (1992) and Lemon et al. (2002), expected value-sharing represents the providers use of profit sharing to establish future incentives. Thus, an adaptation of the threeitem scale of expected value sharing of Lemon et al. (2002) was adopted. The switching-cost scale employed was based on the switching-cost measure of Burnham et al. (2003). Community building was measured by fouritem measures adapted from McAlexander et al. (2002). Perceived service quality was measured based on eight items adapted from Harris and Goode (2004). The items reflect the degree to which customers perceive that e-commerce facilitates efficient and effective shopping, purchasing, and delivery. Perceived trust was measured by adapting the customer trust scale of Chiou (2004), representing honesty, responsibility, understanding/knowledge of consumers, and professionalism. The switching-barrier scale was constructed to estimate the extent to which on-line customers experience a sense of being locked in. A four-item switching barrier was measured by adapting the continuance commitment scale of Bansal et al. (2004). Based on measures developed by various researchers (e.g., Harris & Goode, 2004; Szymanski & Hise, 2000), overall customer satisfaction was measured by a four-item scale, which assessed respondents general satisfaction, confirmation of expectations, and divergence of the actual purchase from the hypothetically ideal product or service. A three-item scale used by Burnham et al. (2003) and Bansal et al. (2004) was adapted to assess customers intentions to remain with their current service providers. To ensure that the English and Chinese versions were consistent in meaning, all the scales used in this study were examined by experts to verify that the items were comprehensible and unambivalent to Chinese respondents. The items used in the questionnaire are shown in Table 1.

RESULTS The LISREL 8.54 program was used to test the theoretical model shown in Figure 1. Following the J. C. Anderson and Gerbing (1988) two-stage approach, confirmatory factor analysis (CFA) was conducted to assess construct validity, and then structural equation analysis was performed to test the research hypotheses. With respect to the quality of the measurement model for the full sample, the constructs display satisfactory levels
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Table 1. Measurement Items and Reliabilities. Standardized Item Loading t Value .93 .94 .90 _a 39.19 33.87

Construct/Item Repurchase intentions (Y1) If I were to repurchase again, I would choose ETMall. (Y2) I consider myself a loyal patron of ETMall. (Y3) I will do more business with ETMall in the future.

Composite Reliability .95

Switching barriers (Y4) It would be very difficult for me to leave ETMall right now, even if I wanted to. (Y5) I would lose too much utility if I decided I wanted to leave ETMall now. (Y6) I feel that I am more familiar with the online shopping environment of ETMall than with other providers. (Y7) I feel that I would have too few options to consider if I were to leave ETMall. Overall satisfaction (Y8) In general, the products/services of ETMall meet my expectations. (Y9) In general, I am satisfied with the services or products that ETMall provides. (Y10) My choice to purchase from ETMall was a wise one. (Y11) I am happy with my decision to purchase from ETMall. Expected value sharing (X1) I anticipate that I will benefit from the service provider. (X2) I expect that in the future, I will use the award points that I accumulate. (X3) I think that I will gain some benefits from doing business with this service provider. Perceived switching costs (X4) It would take a lot of effort to switch from ETMall to another online store. (X5) It takes time to go through the steps of switching to a new online store. (X6) Switching to a new service provider would mean losing or replacing reward points and other benefits that I have accumulated with ETMall. Community building (X7) Making purchases at ETMall is fun. (X8) I feel a sense of kinship with other ETMall shoppers.
456

.78 .73 .52 .78 11.25 17.04

.69

14.95

.92 .84 .87 .91 .88 24.90 26.85 25.46

.85 .82 .85 .76 20.52 18.12

.88 .78 .86 .89 20.73 21.34

.93 .84 .88 25.15 (continued)

TSAI, HUANG, JAW, AND CHEN Psychology & Marketing DOI: 10.1002/mar

Table 1. (continued). Standardized Item Loading t Value .90 .91 26.32 26.73 .92 18.30 18.94 19.91 20.77 17.12 17.83 16.12 .93 .89 .86 .90 .78 .81 27.48 30.63 23.08 24.36 Composite Reliability

Construct/Item

(X9) I am interested in a club for ETMall shoppers and the service provider. (X10) I have met really nice people through ETMall.

Service quality (X11) The products/services I ordered were delivered .77 within the time promised by ETMall. (X12) The quantity and quality of the products/ .77 services I received were exactly as I had ordered. (X13) The organization and structure of online .79 catalogs were logical and easy to follow. (X14) I felt secure in providing personal information .82 to ETMall for my online purchases. (X15) All the terms and conditions (e.g., payment, .85 warranty, and return policies) were easy to read/understand. (X16) If I wanted to, I could easily contact a .73 customer service representative by telephone. (X17) ETMall responds to my inquiries promptly. .75 (X18) ETMall website reacted quickly to my .69 requests for information. Perceived trust (X19) I feel that ETMall is honest. (X20) I feel that ETMall is responsible. (X21) I feel that ETMall understands its customers. (X22) I feel that ETMall cares about me. (X23) I feel that ETMall is very professional. 1-7 scale, 1 strongly disagree; 7 strongly agree.
a

The loading was fixed.

of reliability, as indicated by the composite reliabilities ranging from 0.78 to 0.95 and shared variances ranging from 0.66 to 0.93. To assess the convergent validity of the measures (Bollen, 1989), factor loadings of 0.60 (Bagozzi & Yi, 1988) and squared multiple correlations values above 0.40 (Taylor & Todd, 1995) were used as the criteria. All multi-item constructs meet these criteria, with each factor loading being significantly associated with its underlying factor, which confirms the validity. More robust evidence of discriminant validity was found through the chi-square difference tests in which the correlations between all possible pairs of constructs were first freely estimated, and then set to be equal. All chi-square differences for constructs were significant at the .05 level, suggesting that the constructs under analysis were distinct and discriminately valid. Turning to the structural model itself, Table 2 presents the overall fit of the model and the tests of each research hypothesis. The overall model fit is good, 2(505, N 505) 1476.27, p .001, CFI 0.99, NNFI 0.99, RMSEA 0.062. Although the overall chi-square is significant, which might reflect its sensitivity to sample size (Bagozzi & Yi, 1988), the ratio
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Table 2. Structural Parameter Estimates and Goodness-of-fit Indices.

Paths Expected value sharing switching barriers Perceived switching costs switching barriers Community building switching barriers Community building overall satisfaction Service quality overall satisfaction Perceived trust overall satisfaction Switching barriers repurchase intentions Overall satisfaction repurchase intentions Hypothesis H1 H2 H3a H3b H4 H5 H6 H7 Standardized Coefficient t value Conclusion .16 .40 .44 .24 .33 .35 .59 .36 3.05* 7.65** 7.84** 5.33** 4.74** 4.73** 11.78** 8.37** Support Support Support Support Support Support Support Support

Note. 2 (505, N 505) 1476.27, p .001. Comparative fit index (CFI) .99, normed fit index (NFI) .98, goodness of fit index (GFI) .85, adjusted goodness of fit index (AGFI) .83, root-mean-square error of approximation (RMSEA) .062. *p .01. **p .001.

of chi-square to degrees of freedom (2.9, less than 3) indicates a satisfactory fit (Carmines & McIver, 1981). These fit indices show that a substantial amount of variance is accounted for by the model. Thus, the proposed model is a reasonably accurate representation of the data. H1 suggests that expected value sharing is positively and directly linked to switching barriers. From the structural modeling results and standardized coefficients of 0.16 (p .01), this contention is strongly supported. The results also show that perceived switching costs influence switching barriers positively ( 0.40, p .01), providing some support for H2. Structural equation modeling also broadly supports H3(a) and H3(b), producing significant parameter estimates with standardized coefficients of 0.44 (p .01) and 0.24 (p .01), respectively. H4 proposes a positive and direct relationship between service quality and overall satisfaction. The result also strongly supports this view ( .33, p .01). As expected, perceived trust appears to affect overall satisfaction positively ( .35, p .01). In this regard, H5 is supported. Similarly, H6 and H7 are supported, as the paths from switching barriers and overall satisfaction to repurchase intentions are positive and significant, with standardized coefficients of .59 (p .01) and .36 (p .01), respectively. Finally, the groups with the highest and lowest relational orientation scores were selected, and multigroup analysis was run to estimate the parameters. It was found that the results of the high relational orientation group are identical to the general results; that is, switching barrihigh high ers ( barrier 0.72, p .01) and overall satisfaction ( sat 0.30, p .01) both significantly affect repurchase intentions. For the low relational orientation group, the results also show that switching barriers ( low barrier 0.40, p .01) and overall satisfaction ( low sat 0.40, p .01) significantly impact on repurchase intentions. A chi-square difference test shows that there is a significant degradation in fit when is constrained to be equal across the two groups (2 6.43, df 1, p .05), indicating that the
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effect of switching barriers on repurchase intentions is stronger in the high relational orientation group than in the low group. This finding supports H8(a). However, there is no significant difference between the two groups (2 0.77, df 1, p .1) when sat is constrained to be equal across two groups. Thus, H8(b) is not supported.

DISCUSSION AND MANAGERIAL IMPLICATIONS The Antecedents of Switching Barriers and Overall Satisfaction The present study suggests that on-line customers switching barriers may be strengthened by raising customers perceptions of future value sharing and switching costs, and by community building. Furthermore, online customers overall satisfaction may be increased by improving service quality, enhancing perceptions of trust, and community building. One way to strengthen value sharing perceptions is to provide tangible evidence that the e-retailers are willing to lower their own profits in order to benefit the customer, for example, with award points programs, special discounts, or benefits that can be accumulated. E-retailers attempting to strengthen perceptions of switching costs should incorporate service heterogeneity (i.e., personalized services), the breadth and scope of the customers relationship with the provider, and setup costs (i.e., registering personal information by on-line customers for initial use) into their customer retention programs. For example, the service heterogeneity provided by an e-retailer may increase the economic risks (and associated potential costs) and evaluation costs associated with switching from an e-retailer who is perceived as different or nonsubstitutable in a market (Burnham et al., 2003). Obviously, such bonds are broken when switching to an alternative service provider (Chen & Hitt, 2002). With regard to the total effects of antecedents on repurchase intentions (not reported in the tables), community building has the greatest influence on repurchase intentions. The results suggest that a customerfocused form of community, both on-line and off-line, provides an opportunity for long-term relationship maintenance. As Muniz and OGuinn (2001) argue, community building facilitates the buying and selling process, and, in particular, participants interact intensively with one another within a consumption context positioned around a particular eretailer. McAlexander et al. (2002) suggest that service providers can cultivate a community through programs like strategically designed brandfests. Moreover, through community building, consumers can communicate directly with other participants, and thereby obtain information and solicit opinions. With respect to the various antecedents of customer satisfaction, perceived service quality and trust have the greatest effects on overall satisfaction with direct effects of 0.33 (p .01) and 0.35 (p .01), respecWHY ONLINE CUSTOMERS REMAIN Psychology & Marketing DOI: 10.1002/mar 459

tively. In other words, appropriate deployment of marketing resources aimed at improving service quality and increasing trust significantly enhances on-line customer satisfaction. The results also indicate that eretailers seeking to improve on-line customers perceptions of service quality should consider other significant factors, such as ease of navigation of the on-line store (Parasuraman et al., 2005). More important, providers claims should be matched by physical distribution performance and product return policies to enhance overall satisfaction and further increase loyalty. Thus, it is arguable that the integration of on-line and conventional off-line channels may well prove to be a productive and complementary approach (Harris & Goode, 2004). The present findings not only confirm the claims of Gefen et al. (2003) that the importance of trust on-line appears to be intensified by the absence of face-to-face communication; they also provide some empirical support for the Bendapudi and Berry (1997) proposition that customers trust in a service provider will lead to greater dedication in maintaining the relationship (p. 21). On-line retailing practitioners should develop policies and systems to create on-line customer trust, because virtual reality might be an obstacle to the widespread adoption of a service or product that the e-retailers provide. When relationships are characterized by trust, outcomes can be reliably predicted, which makes on-line customers feel secure in their interactions. The Focal Drivers of Customer Retention The results confirm that switching barriers and satisfaction drive online customers repurchase intentions. The findings have implications for both the theory and practice of e-commerce. Most important, the results suggest the need to extend existing theories of on-line customer retention to incorporate constraint-based drivers, such as switching barriers. Furthermore, consistent with the study of Burnham et al. (2003), the effect of customer satisfaction on repurchase intentions was again found to be much weaker than that of switching barriers, with total effects of 0.36 (p .01) and 0.59 (p .01), respectively. In other words, potential monetary benefits (from the current provider) and costs (of switching to a new provider) appear to be more significant disincentives to switching providers than customer satisfaction. This finding shows that managing customer perceptions of switching barriers to ensure continued customer patronage represents a powerful tactical element in online customer retention programs. The Moderating Role of Relational Orientations In this study, the moderating effect of relational orientations is of considerable importance in Internet-based settings. Given that on-line customers have easy access to information about products or services that
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competitors provide, as most on-line information is just a click away (Chen & Hitt, 2002), e-retailers marketing resources may be allocated inappropriately if the roles of the two drivers are not properly understood in terms of high- and low-orientation customers. The results indicate that the drivers have very different effects on the intentions of these two types of customer. First, a higher relational orientation strengthens the relationship between switching barriers and repurchase intentions. This result suggests that e-retailers should make a concerted effort to factor switching barriers into customer retention programs to retain online customers with a high relational orientation. No evidence is found to support that a higher relational orientation strengthens the relationship between overall satisfaction and repurchase intentions. A possible explanation is that customers in both groups attach considerable significance to previously accumulated satisfaction when deciding whether to continue the relationship with a particular service provider (E. W. Anderson & Fornell, 1994).

CONCLUSION AND FUTURE RESEARCH This study makes three major contributions to e-commerce research. First, it provides researchers with a comprehensive theoretical framework of the antecedents that drive customer motivation to remain with a particular e-retailer. It is found that expected value sharing, perceived switching costs, and community building significantly impact on switching barriers. Moreover, it is also found that community building, perceived service quality, and perceived trust significantly influence overall satisfaction. These findings extend previous research (e.g., Chen & Hitt, 2002; Chiou, 2004; Harris & Goode, 2004; Pavlou & Gefen, 2004), and provide e-commerce practitioners with guidelines for effectively managing on-line customer retention. Second, the results suggest the need to extend existing theories of online customer retention to incorporate anticipation-based drivers, such as expected value sharing. The findings demonstrate that the effect of expected value sharing on switching barriers is highly significant. In considering such future-oriented drivers, the results may partially explain, for example, why dissatisfied customers remain with a certain e-retailer, even when no specific physical asset investments or commitments are involved. Thus, an e-retailers retention program should include expected value sharing as a basic element. Third, this study augments the research on customer retention (e.g., Burnham et al., 2003; Garbarino & Johnson, 1999) by establishing the significant moderating effect of relational orientations on the links between customer retention drivers and repurchase intentions. This suggests that on-line customers with a high relational orientation attach considerable significance to constraint-based factors when deciding
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whether to repatronize a particular e-retailer. An e-retailer should exercise caution when incorporating switching barriers in its retention program, because there are potential dangers associated with an overly aggressive use of switching barriers. One potential limitation of this study is the applicability of the results to other contexts. Future research using this model in other buyerseller settings should enhance the generalizability of these results. Furthermore, distinguishing between positive and negative switching barriers, as they relate to different relational orientation groups, would extend the managerial applications of these drivers. Finally, other variables, such as customer involvement, may also have a moderating effect on the links between drivers and repurchase intentions. Highly involved customers may be retained more effectively by desire-based drivers, because they rapidly and accurately evaluate options and gain additional product- or service-related information. Thus, service providers who rely on switching barriers to retain customers may not achieve their goal. This important issue is challenging and merits further investigation.

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