Switching Costs, Satisfaction, Loyalty and Willingness to Pay for Office Productivity Software

Abstract

Despite the availability of several free and lower-cost alternatives, the multi-billion dollar market for office productivity software suites (OPSS) is dominated by Microsoft Office. Theoretical and empirical research has typically attempted to explain such customer loyalty from the perspective of customer's satisfaction. However, although loyal customers are typically satisfied, satisfaction alone can be an unreliable predictor of loyalty. This research examines how switching costs can impact loyalty in a context where network effects may dominate. Additionally, the research measures how loyalty impacts customer willingness to pay (WTP) using a contingent valuation approach. The results reveal that switching costs do increase consumers' loyalty and WTP. For OPSS loyalty is a significant contributor to increased WTP. Implications for research and practice are discussed.