Influencing customer retention for low-consumption credence goods through social norms

Abstract

Social norms have been claimed to influence customer retention when the social network the customer engages with is well aware of a customer’s use of the product or service. This research investigates whether social norms will also influence customer retention for services that are used so infrequently that the social network the customer engages with is not aware that the customer has the product or service. The specific services investigated are also impacted by the fact that the customers themselves are not entirely certain as to their individual need of the product, namely credence goods. The aim of this research is to provide a profile of a customer that would be more influenced by social norms; which knowledge would allow organisations to target specific customers. Using the Mann-Whitney and Kruskal-Wallis tests, hypotheses were tested by analysing questionnaire feedback data on 100 active insurance customers and 100 inactive insurance customers from within the South African financial services market. Empirical support for the effect of social norms on customer retention of credence goods is found. Empirical proof that females are more influenced by social norms than males was found as well as the link between culture value orientation to social norms. In this research a link between a customer’s age to social norm influence was not found.