The Implications of Switching Barriers on Subscriber Retention in Developing Economies

Issues of retention have become very complex and challenging for mobile network operators in developing economies. Fierce competition and growing customer expectations have made it increasingly difficult in recent years for mobile network operators to retain their subscribers and maintain them profitably. The situation is exacerbated with the introduction of mobile number portability (MNP) in 2011, as mobile network operators in Ghana face rising subscriber churn, because subscribers have more flexibility to switch mobile networks. As a result, it becomes critical for service providers to improve their retention strategies. Switching barriers refers to any factor that makes it costly or difficult for a subscriber to change his/her service provider and this research contributes towards a better understanding of their nature, dimensions and effects on subscriber retention in a developing economic mobile telecommunications industry. Switching barriers studied were the switching costs and attractiveness of alternatives. Three factors of the perceived switching costs identified were learning cost, search costs, and uncertainty cost. Data was collected through questionnaires from amongst 400 target pre-paid subscribers in Accra. Each research question was measured on a 5-point Likert scale. The findings of the research reveal that switching barriers have a negative effect on subscriber retention in Ghana because subscribers have a low perception of switching costs. That is, they don’t perceive any costs associated with switching, and also there’s a high perception of viable alternatives, which poses as threats to substitutes amongst the mobile operators.