Effect of relationship and transactional characteristics on customerretention in emerging online markets

Abstract

Trust is important for maintaining customer relationships in online retailing, as customers have only a virtualconnection with sellers. This is especially true in online markets of emerging economies, given their lack of trust-enhancing infrastructure and well-functioning regulatory institutions. We investigate the effect of trust and a setof other relationship and transactional characteristics—mode of customer acquisition, length of relationship,service communication, product return activity, and type of products purchased—on retention in the context ofemerging online markets. We obtain data from an online retailer in India that include both survey and trans-action information. Using a latent attrition model, wefind that trust positively affects customer retention be-havior. We alsofind that relationship length, service communication, product return experience, and the type ofproducts purchased affect retention. Furthermore, we conduct split-sample analysis and suggest some man-agerial actions on spending efforts to enhance retention