A Contigency Theory for Online Customer Retention: The Role of Online Shopping Habit

Abstract

Customer retention, or repurchase, is one of the main factors that help to create and maintain the competitiveness and sustainability of an organization. With the proliferation of B2C electronic commerce, retention has become even more important to Internet merchants who sell online, where customers are provided with a wide variety of choices and competition is globally severe. As opposed to pageviews and click through ratios, repurchase provides a more revealing metric of the effectiveness of websites. It is therefore important to explain and identify the determinants of online customer retention. Previous IS research on online shopping mainly focused on adoption and usage issues. Very few studies, however, examined whether customers made repurchases after they were attracted to and satisfied with the buying experience and product. In this study, we develop, operationalize and empirically test a model that explains online consumer retention as measured by repurchase. Our findings demonstrated that the direct effect of satisfaction on repurchase is positively moderated by online shopping habit. This research also highlights and identifies specific factors affecting customer retention that should help practitioners in formulating the appropriate marketing strategies.