Satisfaction and switching intention in mobile services: Comparing lock-in and free contracts in the Spanish market

Switching costs are a relevant issue affecting market competition in the mobile services industry. However, customer switching costs have not disappeared, since numerous leading mobile services companies use lock-in strategies, such as obliged long-term contractual relationships. The present study provides and empirically test a conceptual model in order to analyze the creation of customer satisfaction and switching intention with mobile services, as well as to examine the differences between lock-in and free contracts in a South European mature market - Spain. For this purpose, drawing on a sample of 370 customers, we developed Structural Equation Modeling (SEM) through a multi-group analysis. Our findings suggest that service quality is one of the key determinants of satisfaction, while the availability of attractive alternatives is the main switching barrier. Moreover, some interesting differences were found between the two type of contracts analyzed. Consequently, we suggest shifting resources to customer retention through improved service quality for reducing customer churn rate.