Factors influencing the likelihood of customer defection: The role of consumer knowledge

Customer satisfaction is the predominant metric firms use for detecting and managing customers' likelihood to defect. But while satisfaction and defection are related, satisfaction is only a weak predictor of whether a customer will defect. This article suggests that for repurchase decisions that involve an information-based evaluation of alternatives to the incumbent, likelihood of defection will be influenced by how much customers know about those alternatives. The relationship between level of knowledge about alternatives and defection is examined in the context of actual health insurance choices. Results suggest that the level of objective and subjective knowledge about alternatives has a direct effect on likelihood of defection-above and beyond satisfaction level. The view of defection forwarded in this article suggests that managers may be able to gain additional control over customer defection through actions aimed at influencing how much customers know (or come to know) about alternative vendors.