The effect of relationship and transactional characteristics on customer retention in emerging online markets

Trust is important for maintaining customer relationships in online retailing, as customers have only a virtual connection with sellers. This is especially true in online markets of emerging economies, given their lack of trust-enhancing infrastructure and well-functioning regulatory institutions. We investigate the effect of trust and a set of other relationship and transactional characteristics—mode of customer acquisition, length of relationship, service communication, product return activity, and type of products purchased—on retention in the context of emerging online markets. We obtain data from an online retailer in India that include both survey and transaction information. Using a latent attrition model, we find that trust positively affects customer retention behavior. We also find that relationship length, service communication, product return experience, and the type of products purchased affect retention. Furthermore, we conduct split-sample analysis and suggest some managerial actions on spending efforts to enhance retention.