Managing customer turnover in online services: a systems thinking approach

Even as they enjoy impressive growth, one of the major challenges facing providers of online services is a high rate of customer turnover. It has adverse impacts on business performance and has therefore attracted management attention. The literature continues to identify individual determinants of pre-and post-adoptive customer behavior in online services. However, their collective impact is less clear. In this research, we take a " systems thinking " view of turnover. The added value of the systems approach is that interaction among individual determinants and their feedback effects can be modeled. Besides representing the mechanics of turnover more accurately, this approach also allows one to examine the dynamics of turnover. Specifically, we develop a simulation model using the methodology of systems dynamics. Conceptual foundations for its structural components are offered. The model's ability to replicate turnover behavior observed in practice further strengthens its validity. It can contribute to our understanding of the turnover phenomenon and, since the model can be simulated, provide decision support in managing turnover.