Customer reactions to service elimination

This research aims to analyze service elimination with a special focus on churn as a potential outcome of service elimination process. Service elimination has been rather a neglected field among marketing researchers so far with only a few studies describing the characteristic of the service elimination process within firms. Only multi-sector studies include telecommunications in the sample, financial services are in focus of service elimination research. We expect to contribute to service elimination and customer retention literature with combining these fields in our research. Practical relevance is ensured according to our prior qualitative research concluding that there is a rationale behind making the process more efficient, thus reducing customer churn during service elimination. The paper discusses the results of an experimental design based on scenarios that is focusing on the customer side: 2x2 between subjects experiment based on scenarios. We incorporated two scenarios into our research: economic and psychological costs. The main result of the experiment is that economic cost has stronger effect on customer reactions than psychological cost in case of service elimination. The next phase is going to be a 3x3 between subjects experiment based on scenarios, adding the compensation variable to our current research, as based on the literature compensation has an effect on customer complaints. In the case of a forced migration during service elimination we expect compensation to make customers more satisfied, loyal and committed, thus churn to be lower. The limitation of the current study is that we applied a convenience sampling and did not perform the manipulation checks that we plan to do in the next phase