The role of termination fee commitment in developing customer value in the telecommunication industry: an empirical study

Abstract

This study focuses on the marketing variable known as Termination Fee Commitment and its relation to customer value. The use of this variable is widely extended in different industries due to its influence on customer retention from the moment of acquisition. Strikingly, there is very little research on this topic. To explore it in detail, we analyzed a large customer database of a telecommunications company containing five years of information about 63,165 customers. Results of the empirical analysis indicate that the application of a termination fee commitment has a positive impact on customer retention and customer value, with no negative impact on customer satisfaction.