Till the cloud do us part: Technological disruption and brand retention in the enterprise software industry

Barış Kocaman, Sarah Gelper and Fred Langerak

International Journal of Research in Marketing, 2023, vol. 40, issue 2, 316-341

Abstract: As customers in technologically disrupted markets migrate from the old to the new technology, they concurrently decide whether to retain their brand or churn. Yet little is known about brand retention at the time of technology migration, which is the topic of this study. Focusing on cloud disruption in the enterprise software industry, we examine the brand retention of software customers migrating from the old on-premise to the new cloud technology. We combine a large panel of 4,659 customers across 30 brands and five horizontal markets (CRM, BI, HR, ERP, Finance) with brand classification data from industry experts. Our findings reveal that brand retention is the lowest at the time of technology migration (compared to before or after migration), yet some brands are significantly more vulnerable to churn of migrating customers than others. Brand retention at the time of migration is lower for brands that face the same rivals across multiple horizontal markets (i.e., high multimarket contact) than for brands that do not, and the retention disadvantage of such high multimarket contact brands even aggravates as the cloud technology diffuses. Furthermore, top-tier brands are less vulnerable than bottom-tier brands, but their advantage levels out as the cloud technology diffuses. Our findings help brands evaluate their vulnerability to churn of migrating customers and hence are highly relevant for B2B brands in technologically disrupted markets. To facilitate such evaluation, we present a simple assessment tool and provide guidance on mitigating vulnerability to churn.

Keywords: Brand retention; Cloud computing; Market disruption; Innovation diffusion; Multimarket competition; B2B marketing (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:40:y:2023:i:2:p:316-341

DOI: 10.1016/j.ijresmar.2022.11.001

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