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The impact of different price promotions on customer retention

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  • Kim, Jungkeun

Abstract

This paper investigates the impact of different price promotion effects regarding two different types of service cost (i.e., a joining fee vs. a monthly fee) on retention intentions for new customers in the long-term service industry. Based on the depreciation curve, mental accounting, and the escalation of commitment theory, we predict that customers’ retention intentions will be higher when they start using a service with a free monthly fee promotion rather than when they start it with a free joining fee promotion. This expectation was confirmed by five studies; experiments, customer survey, and secondary data. The theoretical and managerial implications are also discussed.

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  • Kim, Jungkeun, 2019. "The impact of different price promotions on customer retention," Journal of Retailing and Consumer Services, Elsevier, vol. 46(C), pages 95-102.
    • Handle: RePEc:eee:joreco:v:46:y:2019:i:c:p:95-102
    DOI: 10.1016/j.jretconser.2017.10.007
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