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Oct 13, 2025 by thesweetdesigns.com 24 views

The Effect of Electronic Word of Mouth (EWOM), Customer Trust, and Switching Barrier on Customer Retention: A Case Study of Lazada Customers in Medan City

Introduction

The rapid growth of online markets in Indonesia has created a highly competitive environment among various existing marketplaces. In this competitive landscape, building a strong relationship with customers is crucial for long-term marketing success. One key indicator of this relationship is customer retention, which refers to a company's ability to maintain existing customers. In this study, we aim to analyze the effect of Electronic Word of Mouth (EWOM), customer trust, and switching barrier on customer retention, specifically among Lazada customers in Medan City.

Background

The growth of online markets in Indonesia has been rapid, driven by increasing internet adoption and public purchasing power of online products and services. This has led to a highly competitive environment among various existing marketplaces. In this context, building a strong relationship with customers is crucial for long-term marketing success. Customer retention is a key indicator of this relationship, and it refers to a company's ability to maintain existing customers.

Methodology

This study was conducted in Medan City, Indonesia, and the research population consisted of Lazada users in Medan, specifically in Medan Deli District, Medan Perjuangan, and Medan Selayang. The total number of residents in this area is 401,872. From this population, 100 respondents were selected using the purposive sampling technique. Data collection was carried out through a questionnaire and Google Form, while data analysis was conducted using descriptive analysis and multiple linear regression analysis through SPSS version 29.

Results

The results of this study showed that simultaneously, EWOM, customer trust, and switching barrier had a positive and significant influence on Lazada customer retention in Medan. In more detail, EWOM and customer trust each had a significant positive influence on customer retention. However, switching barrier did not show a significant effect.

EWOM Effect

Electronic Word of Mouth (EWOM) refers to information, suggestions, or recommendations that are distributed through digital platforms. In the Lazada context, the positive experience shared by other customers through social media or product reviews can increase the interests and trust of prospective customers. This study found that EWOM contributed significantly to customer retention, indicating that customers tend to be more loyal to platforms that have a good reputation and many positive recommendations.

Customer Trust

Trust is a key element in every business relationship. Customers who feel believe in a brand are more likely to make repurchase. In the Lazada context, trust factors can emerge from previous positive experiences, transaction security, and promised product quality. This research confirms the importance of building trust so that customers continue to choose Lazada as their shopping platform.

Switching Barrier

Meanwhile, the switching barrier or obstacles switching, referring to the difficulties faced by customers when they want to move to other brands. In this study, obstacles switch not to show a significant effect on customer retention. This can be caused by the fact that with the many choices of marketplaces available, customers find it easier to switch. Therefore, Lazada needs to pay attention to other factors, such as service and user experience, so that they can still maintain their customers.

Conclusion

The findings of this study provide important insights for Lazada managers and other e-commerce companies in developing more effective marketing strategies. By understanding EWOM's influence and customer trust, they can focus more on increasing customer retention through efforts that focus on building positive reputation and creating satisfying customer experience.

Recommendations

Based on the findings of this study, we recommend that Lazada managers and other e-commerce companies focus on the following strategies to increase customer retention:

Build a positive reputation: By encouraging customers to share their positive experiences through social media or product reviews, Lazada can build a positive reputation and increase customer trust.
Create satisfying customer experience: By paying attention to customer service and user experience, Lazada can create a satisfying customer experience that will lead to customer retention.
Develop loyalty programs: By developing loyalty programs that reward customers for their loyalty, Lazada can increase customer retention and encourage customers to continue choosing their platform.

Limitations

This study has several limitations. Firstly, the sample size was relatively small, and the study was conducted in a specific region. Secondly, the study only focused on Lazada customers in Medan City, and the findings may not be generalizable to other regions or e-commerce platforms. Finally, the study only analyzed the effect of EWOM, customer trust, and switching barrier on customer retention, and did not explore other factors that may influence customer retention.

Future Research Directions

Future research can build on the findings of this study by exploring other factors that may influence customer retention, such as customer satisfaction, perceived value, and brand loyalty. Additionally, future research can investigate the effect of EWOM, customer trust, and switching barrier on customer retention in other e-commerce platforms and regions.
Frequently Asked Questions (FAQs) about the Effect of Electronic Word of Mouth (EWOM), Customer Trust, and Switching Barrier on Customer Retention

Q: What is Electronic Word of Mouth (EWOM)?

A: Electronic Word of Mouth (EWOM) refers to information, suggestions, or recommendations that are distributed through digital platforms, such as social media, product reviews, and online forums.

Q: How does EWOM affect customer retention?

A: EWOM can positively influence customer retention by increasing customer trust and loyalty. When customers share their positive experiences through social media or product reviews, it can increase the interests and trust of prospective customers, leading to increased customer retention.

Q: What is customer trust?

A: Customer trust refers to the confidence that customers have in a brand or company. It is a key element in every business relationship and is essential for customer retention.

Q: How does customer trust affect customer retention?

A: Customer trust can positively influence customer retention by increasing customer loyalty and reducing the likelihood of customers switching to other brands. When customers feel that a brand is trustworthy, they are more likely to make repurchase and recommend the brand to others.

Q: What is a switching barrier?

A: A switching barrier refers to the difficulties faced by customers when they want to move to other brands. It can include factors such as high switching costs, lack of information, and perceived risks.

Q: How does a switching barrier affect customer retention?

A: A switching barrier can negatively influence customer retention by making it difficult for customers to switch to other brands. When customers face high switching costs or lack of information, they are more likely to stay with their current brand, leading to increased customer retention.

Q: What are the implications of this study for e-commerce companies?

A: The findings of this study have several implications for e-commerce companies. Firstly, they should focus on building a positive reputation by encouraging customers to share their positive experiences through social media or product reviews. Secondly, they should create a satisfying customer experience by paying attention to customer service and user experience. Finally, they should develop loyalty programs that reward customers for their loyalty.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the sample size was relatively small, and the study was conducted in a specific region. Secondly, the study only focused on Lazada customers in Medan City, and the findings may not be generalizable to other regions or e-commerce platforms. Finally, the study only analyzed the effect of EWOM, customer trust, and switching barrier on customer retention, and did not explore other factors that may influence customer retention.

Q: What are the future research directions for this study?

A: Future research can build on the findings of this study by exploring other factors that may influence customer retention, such as customer satisfaction, perceived value, and brand loyalty. Additionally, future research can investigate the effect of EWOM, customer trust, and switching barrier on customer retention in other e-commerce platforms and regions.

Q: How can e-commerce companies measure customer retention?

A: E-commerce companies can measure customer retention by tracking metrics such as customer lifetime value, customer churn rate, and customer satisfaction. They can also use tools such as customer relationship management (CRM) software to track customer interactions and behavior.

Q: What are the benefits of customer retention for e-commerce companies?

A: The benefits of customer retention for e-commerce companies include increased revenue, improved customer loyalty, and reduced customer acquisition costs. By retaining customers, e-commerce companies can also reduce the costs associated with acquiring new customers and improve their overall profitability.