Energy costs represent one of the most significant cost drivers for companies. In Italy, these costs are markedly rising: a recent study among Italian SMEs shows that the costs for electric energy and for natural gas have increased respectively on average by 18% and 47% in the last three years. Thanks to the recent liberalization process, firms have now the opportunity to evaluate alternative energy providers and try to reduce their energy expenses. Nonetheless, the switching rate among corporate customers is as low as 6.3%. Whilst a few studies have explored switching behavior and loyalty among private energy customers, there is a lack of knowledge about corporate energy customers. The purpose of this paper is to fill this gap, by exploring the switching behavior of a sample of 110 Italian small and medium firms that purchase natural gas from a middle-sized natural gas supplier. The analysis emphasizes the role of price convenience (but not of dissatisfaction with the service provision) as a driver of the intention to switch to a new supplier. The negative impact of procedural and relational switching costs on the intention to switch emerges, as well. The findings highlight the need for gas service providers to focus on customer orientation and loyalty to stimulate customer loyalty and not just customer repurchases.
Loyalty and switching behavior among corporate energy customers: A study in the Italian context
VIGOLO, Vania;CASSIA, FABIO
2013-01-01
Abstract
Energy costs represent one of the most significant cost drivers for companies. In Italy, these costs are markedly rising: a recent study among Italian SMEs shows that the costs for electric energy and for natural gas have increased respectively on average by 18% and 47% in the last three years. Thanks to the recent liberalization process, firms have now the opportunity to evaluate alternative energy providers and try to reduce their energy expenses. Nonetheless, the switching rate among corporate customers is as low as 6.3%. Whilst a few studies have explored switching behavior and loyalty among private energy customers, there is a lack of knowledge about corporate energy customers. The purpose of this paper is to fill this gap, by exploring the switching behavior of a sample of 110 Italian small and medium firms that purchase natural gas from a middle-sized natural gas supplier. The analysis emphasizes the role of price convenience (but not of dissatisfaction with the service provision) as a driver of the intention to switch to a new supplier. The negative impact of procedural and relational switching costs on the intention to switch emerges, as well. The findings highlight the need for gas service providers to focus on customer orientation and loyalty to stimulate customer loyalty and not just customer repurchases.
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