Impact of Switching Costs on the Tripartite Model – Third Party Logistics

A multitude of companies today has already identified the need to create a loyal customer base and acknowledged that maintaining existing customers and extending business with them are significantly less expensive than acquiring new customers (e.g.[17]). Therefore this paper describes the development of a conceptual model to investigate several factors affecting customer loyalty towards the service provider involving factors such as logistics service quality, customer satisfaction and switching costs. The eventual research using this conceptual model would reveal logistics service capabilities that can be leveraged to create customer and supplier value through service performance (e.g.[44]); increase market share (e.g.[36]); enable mass customization (e.g.[75]); create effective customer response-based systems (e.g.[103]); positively affect customer satisfaction and in turn corporate performance (e.g.[76]); provide a differentiating competitive advantage (e.g.[5],[25],[103]); and segment customers (e.g.[77]). This conceptual model has switching costs as a moderator between customer satisfaction and loyalty relationship. Therefore the research using this model would also reveal the extent switching costs affect the relationship between customer satisfaction and loyalty.