The impact of unprofitable customer abandonment on current customers' exit, voice, and loyalty intentions: an empirical analysis

Purpose – The management of unprofitable customer relationships and particularly their abandonment is a topic that has received increasing interest among practitioners and researchers over recent years. Within this manuscript, the authors aim to analyze the impact of unprofitable customer abandonment on the abandoning firm's current customers, specifically their exit, voice, and loyalty intentions toward the abandoning firm. Design/methodology/approach – The study is based on an online experiment conducted among 385 US customers. Respondents were allocated randomly to one of ten conditions (five levels of tie strength x two types of abandonment strategy) and exposed to a scenario describing a customer abandonment decision implemented by a mobile phone provider. The resulting data were analyzed using a combination of analysis of variance (ANOVA) and structural equation modeling. Findings – The study shows that current customers are significantly more likely to respond actively to unprofitable customer abandonment (exit/voice) than passively through silence and loyalty. Additionally, it shows that increasing satisfaction or switching cost among current customers are unlikely to limit the potential negative consequences of unprofitable customer abandonment. The only variable that drives the choice between exit, voice, and loyalty is the perceived attractiveness of the best alternative relationship. Originality/value – This work analyzes for the first time how existing customers that the firm would like to retain react toward the news that the company proactively terminates unprofitable customer relationships. Therefore, insight is provided into the likely cost associated with unprofitable customer abandonment – a question that has not been the subject of any empirical study as of today.